The New Explanation of Market Equilibrium Based on Theory of Labor Value

There is market equilibrium when the demand willingness is consistent with the supply willingness. From the individual preferences and budget constraints,Western Economics deduced demand curve,causing the traditional demand willingness to be built on the basis of subjective utility. From the relative labor time of economic entity,this paper discusses the relationship between labor time and price readiness,demand curve or supply curve,and establishes the market equilibrium model based on labor value. In a perfectly competitive environment,the equilibrium exchange price of the model is the ratio of labor value between two commodities,and combines demand and supply sides’ recognition of commodity quantity of labor,reflecting the socially necessary labor time contained in commodities.