How is the price determined in a perfectly competitive market with a fixed number of firms?

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Solution

In a perfectly competitive market with a fixed number of firms, the firms are operating in the short run and the equilibrium price is determined by the intersection of the market demand curve and supply curve.

At this price the market demand equals supply.

Also read:

Long Run Supply Curve of a Firm

Short Run Supply Curve of a Firm

Price Elasticity of Supply

Determinants of a Firms Supply Curve

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