ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Firms in a perfectly competitive market are said to be price takers-that is, once the market determines an equilibrium price for the product, firms must accept this price.

Detailed explanation-2: -Competitive equilibrium is achieved when profit-maximizing producers and utility-maximizing consumers settle on a price that suits all parties. At this equilibrium price, the quantity supplied by producers is equal to the quantity demanded by consumers.

Detailed explanation-3: -Equilibrium in perfect competition is the point where market demands will be equal to market supply. A firm’s price will be determined at this point. In the short run, equilibrium will be affected by demand. In the long run, both demand and supply of a product will affect the equilibrium in perfect competition.

Detailed explanation-4: -In a simple market under perfect competition, equilibrium occurs at a quantity and price where the marginal cost of attracting one more unit from one supplier is equal to the highest price that will attract the purchase of one more unit from a buyer.

Detailed explanation-5: -Under perfect competition, equilibrium price is determined at the point of intersection of market demand and market supply.