Walras' Law

Walras' Law states that in a competitive economy, the total value of goods and services consumers want to buy equals the total value of goods and services producers want to sell, so the overall market must balance. It implies that if markets for most goods are in equilibrium, then the remaining markets automatically balance out, meaning no excess supply or demand exists overall. This law highlights that all market activities are interconnected; a surplus or shortage in one market influences others, ensuring the economy tends toward overall balance without needing every individual market to be perfectly in equilibrium simultaneously.