ABSTRACT
The theory of stable equilibrium of normal demand and supply helps indeed to give definiteness to our ideas; and in its elementary stages it does not diverge from the actual facts of life. The question is not just, as Arrow asks, whether we can use the same behavioral theory in disequilibrium as we do in equilibrium. Partial equilibrium analysis in its most direct form usually presumes that all but the choice variables are fixed and given. For the theory of the firm, it usually takes the form of choosing the level of one input and the consequent level of output while everything else is fixed. The individual's behavior is the basis for explaining the state of disequilibrium. One individual is not in a state of partial equilibrium because he or she has chosen a non-maximizing point along the continuum of possible choices.
