ABSTRACT
The general equilibrium model of the economy consists of a set of agents, each with an initial endowment of commodities, interacting through a market, trying to maximize their own utility function. The market prices of commodities are determined by a clearance condition. That is, all commodities are bought, collectively, by all the utility maximizing agents, subject to their budget constraints (determined by the values of their initial endowments of commodities at the market price).
