Long-Run Competitive Equilibrium Homework Help

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Equilibrium is the position or condition where related factors exist in balancing condition. In economics, equilibrium in a competitive market may be long or short run. It depends on the demands and supply of products in the market. Price of a product can be increased with the increment of customer’s demand for that product but price of a product is always decreased if the demand of that product is decreased.

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On the other hand excess supply of a product always decreases its price. And less supply of that product create a scarcity for that product in the market hence, its price is increased. Due to this tug of war between demand and supply, price of a product also get changed continuously.

And in which piece of a product, buyers are willingly purchase and suppliers are also willing to supply that desired product without making any loss, termed as equilibrium price and this condition is termed as equilibrium condition in the field of business.

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Few more about this topic

In the competitive market price and quantity of a product is open to every buyer. The elasticity of demand in a perfect competitive market remains high. The demand curve is as equal as horizontal axis in the graphical feature. Every buyer can make maximum profit in this situation.To earn more profit firms those are already exist in the market produce more products. Additionally some new entities also enter in the market for making maximum profit.

Hence, supply of the product is increased in the market and supply curve shifts to right on the axis. This excess supplyenhances the quantity of the product and reduces the price.The price of the product is fixed up in such a point where desired quantity of the product is fully supplied by the suppliers in the market. So in this point demanded quantity is equal to supplied quantity.

Both demand curve and supply curve interacts each other in this point. This condition is termed as equilibrium. In this way when marginal revenue of a product becomes same as marginal cost then long run competitive equilibrium is established.

Existing firms are unable to make profit they only go through break even. For more updated information for doing your homework on this subject topic you may approach any effective long-run competitive equilibrium homework help.

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