The Competitive Market Model Example
Given the industry’s demand curve QDand the industry’s supply curve QS, the OQ level of output will be transacted in the market at the market price, OP. A market price higher than the equilibrium price OP, will get depressed because of excess supply; and a price lower than OP will get pushed upward because of excess demand. Thus the parametric adjustments at which excess supply =excess demand=zero will decide the equilibrium price at OP and the equilibrium
output at OQ.
We can construct a simple competitive market model to illustrate the solution with respect to the decision variables : market price and market output. Let us have a model consisting of two behaviourial equations and one equilibrium condition.
The equation (i) states the equilibrium condition for the market. The equation (ii) states the demand function, and the equation (iii), the supply function, where,
P=Pince prevlalling in the market
QD=Output demanded in the market
QS=Output supplied in the market
do,so=Intercept terms for the demand curve and supply curves respectively
Email Based, Online Homework Assignment Help in Competitive Market Model Example
Transtutors is the best place to get answers to all your doubts regarding competitive market model example. Transtutors has a vast panel of experienced managerial economics tutorswho can explain the different concepts to you effectively. You can submit your school, college or university level homework or assignment to us and we will make sure that you get the answers related to regarding competitive market model example