Question

A producer is set to be inequilibrium at the level of output at which marginal cost is equal to marginal revenue.why ? is equlibrium between marginal cost and marginal revenue sufficient to ensure equlibrium ? explain?(2 eco )

Answer 1

Condition of consumer's eq according to ques is....MR=MC..... it is a true rationale behind eq....... becz
when MR> MC then,, profit can be maximised by raising output level.....
and,,,,,,
when MR<MC then,,,, profit is to be gained by reducing sales outcomes...
SO------ MR= MC is the situation of maximum profit .......
but IT IS NOT ONLY SUFFICIENT ...
The 2nd rationale behind eq is MC must be rising at the point of eq....
because .....
it will be the point only where producer will stop his production according to Diminishing return to the factor........

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