Short-run perfectly competitive equilibrium is defined as:
A)the market price and quantity at which quantity demanded equals quantity supplied in the short term.
B)the output level and price where all firms in the market are profit maximizing.
C)the point at which all firms earn zero profits.
D)the point where there is no incentive to enter the market.

Question

Quizplus · Accepted Answer

Short-run perfectly competitive equilibrium is defined as the market price and quantity at which quantity demanded equals quantity supplied in the short term. In this situation, all firms in the market are price takers, with no ability to influence the market price. At this equilibrium point, there is no excess supply or excess demand, and the market is in balance. Short-run perfectly competitive equilibrium is when the market price and quantity are such that quantity demanded equals quantity supplied in the short term. This means that there is no excess demand or supply in the market, and all buyers and sellers are able to transact at the prevailing market price. In the short run, firms may be earning profits or losses, but the market is in equilibrium as long as there is no excess demand or supply. Choices B, C, and D describe long-run equilibrium outcomes, which depend on factors such as firm entry and exit and technological advances.

Short-Run Perfectly Competitive Equilibrium Is Defined As