Explain the rationale behind the conditions of equilibrium of a producer
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Heya....
See here for your answer....
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Producer Equilibrium is the point of maximum satisfaction to the producer, mean to say the situation of maximum profit...
** Rationale behind the producer Equilibrium are....
1 MR = MC
The cost used on every additional output should be equal to the revenue received...
If MC > MR then,, by cut in output profit can be gained..
If MR > MC then,, by add in output profit can be increased...
2 MC must be rising at the equilibrium point...
It means this is the 2nd stage of production and beyond this marginal product will decrease, so this is best point of satisfaction..
-- Be Brainly...
See here for your answer....
=============
Producer Equilibrium is the point of maximum satisfaction to the producer, mean to say the situation of maximum profit...
** Rationale behind the producer Equilibrium are....
1 MR = MC
The cost used on every additional output should be equal to the revenue received...
If MC > MR then,, by cut in output profit can be gained..
If MR > MC then,, by add in output profit can be increased...
2 MC must be rising at the equilibrium point...
It means this is the 2nd stage of production and beyond this marginal product will decrease, so this is best point of satisfaction..
-- Be Brainly...
Answered by
1
This implies that higher profits can be achieved by increasing the level of output to OQ2. ... This implies that higher profits can be achieved by reducing the output level to OQ2. Thus, the point E is the producers equilibrium and OQ2 is the profit maximising output level, where Price =MC and also MC curve is rising.
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