Necessary condition for frim equilibrium
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A firm is said to be in equilibrium when its marginal cost is equal to marginal revenue and marginal cost curve cuts the marginal revenue curve from below. A firm in equilibrium enjoys supernormal profits if average revenue exceeds marginal cost.
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The necessary condition for equilibrium position of a firm is MC=MR. A firm is in equilibrium when it has no tendency to change it's level of output. It needs neither expansion not contraction. It wants to earn maximum profits in by equating it's marginal cost with its marginal revenue,i.e. MC=MR.
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