Question

Explain the conditions of producer'* equilibrium with the help of a schedule, assuming that the producer can sell more only by lowering the price.

Answer 1

*Producer' Equilibrium:** It refers to the situation in which a producer maximises his profit and minimises his loss.

*Conditions of Producer' Equilibrium:**

(i) MR = MC.

(ii) MC > MR after equilibrium.

The Producer is in equilibrium at 3 units of output. Here both the conditions are fulfilled.

(i) MR=MC

(ii) MC > MR after equilibrium.