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Equilibrium of the industry

Industry consists of large number of independent firms. Each such firm in the industry produces homogenous products. When the total output of the industry is equal to the total demand and when it has no incentive to expand or contract production, we say that the industry is in equilibrium.
Under equilibrium condition the equilibrium price for a given product is determined by ‘price mechanism’. That is the interaction of the forces of demand and supply.

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