Producers Equilibrium-A producer (firm) is said to be in equilibrium when the firm is producing that quantity of output which gives the firm maximum profit.
For a firm to be in equilibrium two conditions must be fulfiIled. First and the necessary condition is that firm'* marginal cost equals marginal revenue. Second, along with the first condition is that MC must be greater than MR beyond the level of output at which MC = MR. Therefore, fulfillment of the first condition alone does not ensure maximum profits. It is possible that MC = MR condition may be fulfilled at more than one output level but only that output level beyond which MC > MR is the maximum profits output level.
