Perfectly competitive market

A perfectly competitive market is one that has free movement of information. In addition, it has many buyers and sellers ready and willing to sell and buy after considering various market prices (Schwartz 2010). Competitive markets are guided by the free flow of information on the pricing of goods and services.

Prices of basic commodities tend to change with the market information at a particular time. Given that the number of buyers increases, demand for goods and services increases. On the other hand, given a pumper harvest, supply will increase. Increase in the supply of goods and services will relatively decrease the prices in the market.

 The aforementioned factors affect the market equilibrium. Market equilibrium is the intersection points of supply and demand curves. This is a region where the seller and buyer settle on the quantity and price of a good or service. The forces of demand and supply affect market equilibrium. They may either cause a shift of the curves (both supply and demand) or cause a movement along them.