Q4 of 15 Page 5

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

In a market where entry and exit is permitted, the equilibrium number of firms determined by equilibrium quantity supply per firm.


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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.

 5

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

 6

What will happen if the price prevailing in the market is

(i) Above the equilibrium price.


(ii) Below the equilibrium price.