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प्रश्न
From the following information about a firm, find the firms equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output
| Output (units) | Total Revenue (Rs) | Total Cost (Rs) |
| 1 | 7 | 8 |
| 2 | 14 | 15 |
| 3 | 21 | 21 |
| 4 | 28 | 28 |
| 5 | 35 | 36 |
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उत्तर
| Output (units) |
Total Revenue (Rs) |
Total Cost (Rs) |
Marginal Revenue (Rs) |
Marginal Cost (Rs) |
Profits (TR − TC) |
| 1 | 7 | 8 | - | - | -1 |
| 2 | 14 | 15 | 7 | 7 | -1 |
| 3 | 21 | 21 | 7 | 6 | 0 |
| 4 | 28 | 28 | 7 | 7 | 0 |
| 5 | 35 | 36 | 7 | 8 | -1 |
The producer’s equilibrium refers to the situation in which he maximises his profits. A producer strikes equilibrium when two conditions are satisfied:
i. MR = MC
ii. MC is rising or the MC curve cuts the MR curve from below.
The table indicates that the two conditions of equilibrium are satisfied only when 4 units of output are produced. It is here that (i) MR = MC = Rs 7 and (ii) MC is rising.
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