Question

What is the effect on equilibrium price and quantity in the following cases?
(a) Increase in number of firms (b) Use of outdated technology​

Answer 1

Answer:

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Explanation:

Market equilibrium is defined as the state of rest that is determined by the rational objectives of the consumers and the producers (i.e. maximisation of satisfaction and profit respectively). It is a state where the aggregate quantity that all the firms want to sell are purchased by consumers, i.e. market supply equals market demand. At this situation, there is no incentive or tendency for any change in quantity demanded, quantity supplied and price. That is: yd = ys.