Question

From the following information about a producer find out the level of output at which he will be in equilibrium.

| Output (Units) | 1 | 2 | 3 | 4 | 5 |
| Price (Per Unit In Rs.) | 10 | 9 | 8 | 7 | 6 |
| Marginal Cost (In Rs.) | 10 | 6 | 3 | 4 | 7 |

Answer 1

| Output | Price | TC | MR | MC |
| 123 | 1098 | 101824 | 1086 | 1063 |
| 4 | 7 | 28 | 4 | 4 |
| 5 | 6 | 30 | 2 | 7 |

The producer is in equilibrium producing 4 units because this meets both the conditions of equilibrium.

(i) MC = MR

(ii) MC > MR after equilibrium.