Question

In terms of total revenue and total cost approach, equilibrium of the firm is at that level of output ______.

Options

• where difference between TR and TC is maximum

• where the slop of TR curve and TC is the same

• where total profit is maximum

• all of these

Answer 1

In terms of total revenue and total cost approach, equilibrium of the firm is at that level of output where difference between TR and TC is maximum, where the slop of TR curve and TC is the same, also where total profit is maximum.

Explanation:

Under the Total Revenue, Total Cost approach, a firm is in equilibrium at the level of output where the difference between total revenue and total cost is maximum. This occurs when the slopes of the TR and TC curves are equal, i.e., MR = MC, ensuring maximum profit.