At the point of equilibrium, a perfectly competitive firm earns maximum profits. Profits can be abnormal, supernormal or normal. At the point of equilibrium, the surplus of total revenue over total cost is maximized and correspondingly the marginal cost curve cuts the marginal revenue curve from below. We would now move to discuss the equilibrium […]
Determination of Market Equilibrium under Perfect Competition
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Short Run and Long Run Equilibrium under Perfect Competition (with diagram)
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Short Run and Long Run Equilibrium under Perfect Competition (with diagram)! Under perfect competition, price determination takes place at the level of industry while firm behaves as a price taker. It produces a quantity depending upon its cost structure. The industry under perfect competition is defined as all the firms taken together. Price determination will […]
Time Element and Price Determination under Perfect Competition | Microeconomics
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Time Element and Price Determination under Perfect Competition! Under perfect competition, price of the commodity is determined by the forces of demand and supply. Marshall, who propounded the theory says the price is determined by the forces of demand as well as supply. He also laid emphasis on the time element in the determination of […]