Price Determination in Perfect Competitive Markets

PRICE
DETERMINATION

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Explain how prices are determined in perfect competitive markets and discuss with examples
what causes them to change.........................................................................................................3
What factors causes the equilibrium price to change..................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The market equilibrium is important aspect for the determinisation of price of specific good in
the market. In the market, there are two set of forces tending in the opposite directions that’s is
demand and supply. There is subject of fluctuation which tend to have the increase of decrease
in the demand and supply curve. In this report, there will be discussion on how the prices are
determined in perfect competitive markets and discuss with examples what causes them to
change. In addition to that’s the discussion on different factor which are effecting the equilibrium
price to change.
MAIN BODY
Explain how prices are determined in perfect competitive markets and discuss with examples
what causes them to change.
Figure 1 Price equilibrium
(Source: price equilibrium, 2017)
how prices are determined in perfect competitive markets
In economics, economic equilibrium is a situation in which economic forces such as
supply and demand are balanced and in the absence of external influences the values of
economic variables will not change. In order to analyse and determine the equilibrium related to
price the individual needs to analyse on which price the supply and demand curve can be