Question

Write the main condition for the equilibrium of a firm

Answer 1

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ANSWER OF UR QUESTION IS.....

“A firm is a unit engaged in the production for sale at a profit and with the objective of maximizing profit.” -Watson

A firm is in equilibrium when it is satisfied with its existing level of output. The firm wills, in this situation produce the level of output which brings in greatest profit or smallest loss. When this situation is reached, the firm is said to be in equilibrium.

“Where profits are maximized, we say the firm is in equilibrium”. -Prof. RA. Bilas

A firm is said to be in equilibrium when it satisfies the following conditions:

1. The first condition for the equilibrium of the firm is that its profit should be maximum.

2. Marginal cost should be equal to marginal revenue.

3. MC must cut MR from below.

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