Arrange the stages of price determination in a perfect competition market:

(A) Estimate the market demand and supply.
(B) Firms adjust production to maximize profit.
(C) Equilibrium price is established.
(D) Short-run profit attracts new firms.

Choose the correct answer from the options given below:

(A), (C), (B), (D)

The correct answer is Option (1) → (A), (C), (B), (D)

• (A) Estimate the market demand and supply. Price determination begins with identifying how much buyers want to buy (demand) and how much sellers want to sell (supply).

• (C) Equilibrium price is established. The intersection of demand and supply determines the equilibrium price and quantity in the market.

• (B) Firms adjust production to maximize profit. Once the price is known, individual firms decide how much to produce by equating price with marginal cost to maximize profits.

• (D) Short-run profit attracts new firms. If existing firms make supernormal profits in the short run, new firms enter the market in the long run, which eventually affects supply and stabilizes profit at normal levels.