Price Determination in a Perfectly Competitive Market
The price, p 0, of the good that would be obtained at the point of intersection, E, of the aggregate demand curve, DD, and the aggregate supply curve, SS, would itself be the equilibrium price of the good.At p = p 0, the market demand and market supply of the good are equal, both being equal to q = q 0 in Fig. 10.14. That is why, here p = p 0 is the equilibrium price and q = q 0 is the ...
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