Explain how the equilibrium level of output is determined in perfect competition. Both for the whole market and one firm within the market

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Explain how the equilibrium level of output is determined in perfect competition. Both for the whole market and one firm within the market:

The equilibrium is the point where economic forces are balanced and there are no external influences. The equilibrium is the condition where a market price is established through competition such that the amount of goods or services sought by  is equal to the amount of goods or services produced by .

Perfect competition describes a market in which no buyer or seller has . Such markets are usually allocatively and productively efficient. In general a perfectly competitive market is characterized by the fact that no single firm has influence on the price of the product it sells.

A perfectly competitive market has many distinguishing factors. A market in perfect competition has many people who are willing and able to buy a product as well as a many buyers who are willing and able to produce the products. The products the firms supply are exactly the same. Another distinguishing characteristic in a perfectly competitive market is that there are low entry and exit barriers to the market, and it is relatively easy for a firm to enter or exit the market. There is also perfect information for the consumers and producers. Most importantly, in a perfectly competitive market, the firms aim to maximize profits, firms aim to sell where marginal costs meet marginal revenue, where they generate the most profit.

Following on from above, an important idea from which equilibrium output is determined in perfect competition is that the firms main aims are to maximize profits. So, price taking from the firms guarantees, that when the firms maximize profits, by choosing the quantity they wish to produce and the combination of factors of production to produce it with, the market price will be equal to marginal cost.  The price = marginal revenue = average revenue – The demand curve is horizontal. So as the firms they have the choice of how much they supply, but no firm has more influence on the equilibrium than any other firm. In the short run the equilibrium market price is determined by the interaction between market demand and market supply. The long run equilibrium for a perfectly competitive market occurs when the marginal firm makes normal profit only in the long term.

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In the long run equilibrium, the business will be operating at the minimum point on both long - run and short - run average cost curves obtaining full economy of scale. As firms grows larger it is possible for them to reduce their cost of production and it is shown as the declining pert of LRAC

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Firms in a perfectly competitive market are able to make abnormal profits, however not for a sustained or great deal of time as there are no, or limited barriers to entry in a perfectly completive market thus other firms see that there ...

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This essay starts off well but I do not think the writer has a full grasp of this (quite difficult) concept of perfect competition. The second part of the essay drifts away from the question too much and does not come to a conclusion on the extent to which IT has increased competition.