explain the determination of equilibrium price under perfect competition with the help of a schedule and diagram class 11
Answers
Answer:Pricing under Perfect Competition will be considered in three different periods-
Market Period - The time period during a market period is so brief that no one can enhance their output. Depending on the nature of the product, the market time for the stock may be an hour, a day, a few days, or even a few weeks.
Short Run - Short term refers to a period of time that is not long enough to affect a constant input, such as the number of companies in an industry, but is long enough to modify a variable input, such as the output. There are two distinct costs in the short term: I fixed costs and (ii) variable costs.
Long Run - A long term is a period of time long enough to enable both variable and fixed components to be changed. All factors are therefore changing and not fixed in the long run.
Explanation:
- A market with perfect competition has many consumers and sellers who deal in the same kinds of goods.
- In accordance with this, a single buyer or seller cannot change the market price by boosting or lowering their output.
- In a market with perfect competition, the entire sector sets the price of the goods.
- This suggests that in a market with perfect competition, demand and supply are the two market factors that decide a product's market price.
- In a market with perfect competition, a product's price is set at the intersection of the supply and demand curves. Both the price and this point are referred to as the equilibrium point and price, respectively.
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