In a perfectly competitive market with a fixed number of firms, the equilibrium price is determined through the interaction of market demand and market supply forces. The market demand curve is derived from price-taking consumers, while the market supply curve is derived from price-taking firms under the assumption of a fixed number of firms.

The market demand curve shows the quantity that consumers are willing to purchase at different prices. It generally slopes downward from left to right, indicating an inverse relationship between price and quantity demanded.

The market supply curve shows the quantity that all firms in the market are willing to supply at different prices. With a fixed number of firms, this curve is obtained by aggregating the supply of all individual firms. It generally slopes upward, showing a direct relationship between price and quantity supplied.

The equilibrium price and equilibrium quantity are determined at the intersection of the market demand and market supply curves. At this point, market demand equals market supply, and there is neither excess demand nor excess supply in the market.

Thus, in a perfectly competitive market with fixed number of firms, supply and demand forces work together to determine where the market will be in equilibrium. The price settles at a level where the quantity that consumers want to buy equals the quantity that firms want to sell.