Question

What is meant by Equilibrium of the firm?

Answer 1

Answer:

A firm is said to be in equilibrium when it has no incentive either to expand or to contract its output. A firm would not like to change its level of output only when it is earning maximum money profits. Hence, making a maximum profit or incurring a minimum loss is an important condition of a firm's equilibrium.

Answer 2

The equilibrium of the firm means the output levels of a company is not change in any condition.

What are the conditions for the equilibrium of a firm?

• The firm or the business gains profit then is the condition for the equilibrium of a firm
• When marginal cost is equal to the marginal revenue then it is a condition for the equilibrium of the firm
• When the company does not want to change its output level then it is a condition for the equilibrium
• The maximum profit earned by the firm when both the marginal cost and marginal revenue are equal