mc must be rising at the point of producer equilibrium .comment .
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Falling Mc means that the cost of producing an additional unit of output tends to reduce. In a situation when price is constant (as under perfect competition) this would be the situation when the difference between firm TR and TVC (TVC=£MC) tends to increase.This means a situation when firm gross profit (TR-TVC) text to rise. Why Should a firm not increase output when its gross profit are rising.? Certainly it will. Therefore it is only when MC is rising that the firm will find its equilibrium output.
Falling Mc means that the cost of producing an additional unit of output tends to reduce. In a situation when price is constant (as under perfect competition) this would be the situation when the difference between firm TR and TVC (TVC=£MC) tends to increase.This means a situation when firm gross profit (TR-TVC) text to rise. Why Should a firm not increase output when its gross profit are rising.? Certainly it will. Therefore it is only when MC is rising that the firm will find its equilibrium output.
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