Competitive Equilibrium

Competitive equilibrium is a state in a market where supply equals demand, meaning the quantity of goods or services businesses want to sell matches what consumers want to buy at a certain price. In this situation, prices stabilize because no party can improve their situation by changing their behavior alone. It results in an efficient distribution of resources, where goods go to those who value them most, and producers cover their costs. Essentially, it's a balanced point where the market clears, ensuring optimal allocation of resources without excess supply or unmet demand.