Question

Why do competitive markets achieve equilibrium?

Answer 1

Explanation:

Competitive market is consist large number of manufacturer and producer with so many buyer as seller. In this kind of market a single buyer or seller could not able to influence market single handedly and cannot not control price level at any cost. Even other players in the market also could not control the price of commodity or goods. In competitive market situation is that the every buyer have to pay max price for their demand of raw material and seller have to charge minimum selling price in order to survive and to earn enough profit, if any one tries to go overboard and charge the more price they will automatically kicked out of competition. Thus the every seller and buyer have to stick to equal price and market in the perfect competitive market remains in equilibrium.