Q1 of 15 Page 5

Explain market equilibrium.

Market equilibrium is a market state where the supply in the market is equal to the demand in the market. The equilibrium price is the price of a good or service when the supply of it is equal to the demand for it in the market.


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2

When do we say there is excess supply for a commodity in the market?

 3

Explain how price is determined in a perfectly competitive market with fixed number of firms.

 4

How is the equilibrium number of firms determined in a market where entry and exit is permitted?

 5

How is the optimal amount of labour determined in a perfectly competitive market?