Competitive equilibrium refers to the market condition where the quantity supplied equals the quantity demanded, influenced by interactions between consumers and sellers. It predicts market prices and total quantities while integrating concepts from various economic theories. The method effectively maintains market balance and addresses welfare maximization through fractional and integral assignments.

1. Competitive Equilibrium

2. Overview
 The term equilibrium represents an equilibrium
condition and whereas the competitive equilibrium
refers to the condition that refers to the market level
where it is the interaction between the consumers and
traders who sell goods in the market
 In this method, the quantity supplied is always equal to
the quantity demanded
 This type of equilibrium method is based on the firm
and the individual consumer
 Competitive equilibrium has the ability to predict the
price and the total quantity in the market

3. Factors related to the competitive
equilibrium
 Economic equilibrium
 General equilibrium theory
 Demand schedule
 Scarcity principle
 Neoclassical growth theory
 Walra’s law
 Recursive competitive equilibrium
 equilibrium

4. Welfare theorems
 When any competitive equilibrium maximizes the
welfare over the realistic assignments of items and the
fractional assignments-we can assign the fractional
method for the items of different suppliers so that a
better relationship can be maintained in the competitive
level of market
 Instead, when the integral assignment occurs, then the
completive equilibrium method that maximizes the
integral assignment is applied

5. Advantages
 The competitive equilibrium method in bringing the
given process to a balanced state
 The terms and factors remains unchanged even at the
end of the process including the external influences
 This method depends on the hypothetical supply and on
demand level depending on the graph

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