The Second Principle: Equilibrium | Economics For Everyone

No one — not small firms, big firms, governments, or even you — makes decisions in isolation. Economists believe everyone is trying to optimize. While you are optimizing your decision making, so is everyone else. Because we exist in a world where everyone is simultaneously optimizing, your decisions influence everyone else and vice versa. One of the core principles is a special situation no one would personally benefit by changing their behavior. In this lesson, Professor Min Sok Lee explores the idea of equilibrium including applications using supply and demand. Chapters 00:24 Defining equilibrium 01:04 Simultaneous optimization & dynamic equilibrium - movie theater example 03:13 Supply and demand application 05:27 Price adjustments toward equilibrium -- Setting aside math, E4E helps students everywhere think like economists and understand how economic thinking can make the world a better place. Whether you're an educator, a student, or a lifelong learner, Economics for Everyone is for you! Register at https://econ4everyone.uchicago.edu to access more than 60 videos featuring UChicago professors and researchers in our free microeconomics curriculum, available in English and Spanish.