Editing Underemployment equilibrium (section)

==Theoretical framework==

===Origin===
The concept of underemployment equilibrium originates from analyzing underemployment in the context of General Equilibrium Theory, a branch of microeconomics. It describes a steady economic state when consumptions and production outputs are both suboptimal – many economic agents in the economy are producing less than what they could produce in some other equilibrium states.[1] Economic theory dictates that underemployment equilibrium possesses certain stability features under standard assumptions[2] – the “invisible hand” (market force) can not, by itself, alter the equilibrium outcome to a more socially desirable equilibrium.[3] Exogenous forces such as fiscal policy have to be implemented in order to drive the economy to a better state.

===Formal definition=== 
In an economy <math>E=((u^h,e^h )_h,(Y^f,(\theta^fh )_h )_f)</math>: every economic agent ''h'' has a utility function <math>u^h</math> and an initial endowment of wealth <math>e^h;</math> every firm ''f'' has a production function <math>Y^f;</math> every agent’s share of firm ''f'' is <math>(\theta^fh )_h.</math> An underemployment equilibrium, given a price vector ''p'', is defined as the consumption-production vector <math>(x^*,y^* )</math> such that [4]

:For every firm ''f'', producing <math>y^*</math> maximizes its profit
:For every economic agent ''h'', consuming <math>x^*</math> maximizes its utility 
:The market clears, meaning that the sum of optimal consumptions of all agents, <math>\sum x^*</math> , equals to the sum of their initial endowments, <math>\sum e^*,</math>  plus the sum of optimal profits for all firms, <math>\sum y^*.</math>[1]