maximisation of profit implies equilibrium ,but equilibrium doesn't always imply maximisation of profit..explain??
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Yes maximization of profit implies equilibrium but equilibrium doesn't implies maximization of profit...
Explaiination.....
Profit is the situation where the consumer and producer is getting it's maximum satisfaction and we know that equilibrium is itself a situation of maximum satisfaction where...Demand = Supply for a consumer and MR= MC for producer....So profit is automatically implies equilibrium .....
But ....
Equilibrium can be set on small value also even when a poor is capable to purchase a good of low price but for producer it will not be his profit ...Because he is not getting maximum revenue....
Hope u understand....
Yes maximization of profit implies equilibrium but equilibrium doesn't implies maximization of profit...
Explaiination.....
Profit is the situation where the consumer and producer is getting it's maximum satisfaction and we know that equilibrium is itself a situation of maximum satisfaction where...Demand = Supply for a consumer and MR= MC for producer....So profit is automatically implies equilibrium .....
But ....
Equilibrium can be set on small value also even when a poor is capable to purchase a good of low price but for producer it will not be his profit ...Because he is not getting maximum revenue....
Hope u understand....
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