Q.Define or explain the following concept:
General equilibrium

Micro : Slicing method :: Macro : Lumping method.

Prof. Ragnar Frisch popularised the twin terms. Microeconomics examines the behaviour of small, individual economic units — a single consumer, firm, household or commodity — by cutting the economy into slices, which is why it is called the slicing method (a piecemeal or partial view).

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Microeconomics uses the slicing method — it slices off a single unit (a consumer, a firm, an industry, one price) from the whole economy and studies it in detail. The aggregative (lumping) method is used by macroeconomics. Correct option: Only c.

Why: The term was popularised by Prof. Boulding. Microeconomics looks at the economy the way you would examine one slice of a cake rather than the whole cake — it isolates a small individual part (a household's demand, a firm's output, the price of one commodity) while treating the rest as background. This is exactly opposite to the lumping / aggregative method of macroeconomics, which adds up individual units into totals such as national income, aggregate demand and the general price level.

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Completing the correlation: Partial equilibrium : Microeconomics :: General equilibrium : Macroeconomics. Answer: Partial equilibrium.

Why: Equilibrium analysis is of two kinds:

• Partial equilibrium — studies the equilibrium of a single individual unit (one consumer, one firm, one market) assuming everything else in the economy remains unchanged. This piecemeal approach belongs to microeconomics. …

The correct alternative is partial.

Microeconomics is a partial equilibrium approach. It uses the slicing method — the economy is sliced into small parts (an individual consumer, a firm, a single commodity market) and each part is studied separately assuming "other things remaining constant" (ceteris paribus). The general equilibrium approac …