Utilities, Endowments, and Equilibrium in Financial Theory - Lecture 2
Explore the foundations of economic modeling and equilibrium theory in this 72-minute lecture from Yale University's Financial Theory course. Delve into the purpose and power of economic models, including their ability to facilitate counterfactual reasoning and produce unexpected insights. Trace the historical development of market concepts from ancient Greece to Shakespeare, and examine how the supply and demand model applies to various real-world scenarios. Investigate the modern theory of general economic equilibrium, extending the basic model to continuous quantities and multiple commodities. Learn about marginal utility and the role of endowments in determining equilibrium. Gain a solid understanding of these fundamental economic concepts as a foundation for exploring financial equilibrium in future lectures.