Competitive Equilibriums

What does 'Competitive Equilibriums' mean

Competitive equilibriums is an equilibrium condition where the interaction of profit-maximizing producers and utility-maximizing consumers in competitive markets with freely determined prices will give rise to an equilibrium price. At this equilibrium price, the quantity supplied is equal to the quantity demanded.

BREAKING DOWN 'Competitive Equilibriums'

While the basic supply and demand model is based on individual consumer and firm behavior, the competitive equilibrium model is based on the behavior of aggregate consumers and firms in competitive markets. It can be used to predict the equilibrium price and total quantity in the market, as well as the quantity consumed by each individual and output per firm.

RELATED TERMS
  1. Economic Equilibrium

    A condition or state in which economic forces are balanced. These ...
  2. Equilibrium Quantity

    The quantity of an item that will be demanded at the point of ...
  3. Equilibrium

    The state in which market supply and demand balance each other ...
  4. General Equilibrium Theory

    General equilibrium theory studies supply and demand fundamentals ...
  5. Quantity Demanded

    A term used in economics to describe the total amount of goods ...
  6. Demand Schedule

    In economics, the demand schedule is a table of the quantity ...
Related Articles
  1. Term

    What Is Equilibrium?

    Equilibrium is a state of balanced supply and demand.
  2. Term

    What Is Economic Equilibrium?

    Economic equilibrium occurs when market supply is equal to market demand.
  3. Professionals

    Supply and Demand

    Supply and Demand
  4. Professionals

    Supply and Demand

    Supply and Demand. Focuses on price movements caused by shifts in the demand or supply curve.
  5. Economics

    Economics Basics: Supply and Demand

    Investopedia explains: The Law of Demand, The Law of Supply, Supply and Demand Relationship, Equilibrium, Disequilibrium, and Shifts vs. Movement
  6. Economics

    What is Deadweight Loss?

    Deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources.
  7. Professionals

    Effect of Taxes on Supply and Demand

    Tax Effects. This section illustrates how taxes alter the supply and demand equilibrium creating deadweight.
  8. Economics

    Explaining Quantity Demanded

    Quantity demanded describes the total amount of goods or services that consumers demand at any given point in time.
  9. Economics

    Economics Basics: Conclusion

    Recap of the key learnings from Investopedia's economics tutorial .
  10. Economics

    The Nash Equilibrium

    Nash Equilibrium is a key concept of game theory, which helps explain how people and groups approach complex decisions. Named after renowned mathematician John Nash, the idea of Nash Equilibrium ...
RELATED FAQS
  1. What is general equilibrium theory in macroeconomics?

    Achieving equilibrium of prices in a single or multi-market setting involves a bidding process that is informed precisely ... Read Answer >>
  2. How does the law of supply and demand affect prices?

    Learn what the law of supply and demand is, what relationship it has with prices, and how the law of supply and demand affects ... Read Answer >>
  3. What does the Nash equilibrium predict?

    Learn more about the famous Nash equilibrium, which is the revolutionary concept in game theory about the economics of human ... Read Answer >>
  4. Why are there no profits in a perfectly competitive market?

    See why economic profits are theoretically impossible in a perfectly competitive market and why some economists use perfect ... Read Answer >>
  5. What is the difference between a dominant strategy solution and a Nash equilibrium ...

    Dive into game theory and the Nash equilibrium, and learn why the Nash equilibrium assumptions about information are less ... Read Answer >>
  6. How does a lack of demand affect financial markets?

    Discover how a lack of demand affects financial markets. A lack of demand leads to a new price equilibrium, as prices dramatically ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center