Question

Explain how a producer attains equilibrium using the TR and TC approach.

Answer 1

According to the TR and TC approach, producer's equilibrium refers to stage of that output level at which the difference between TR and TC is positively maximized and total profits fall as more units of output are produced. After reaching such a position, there will be no incentive for the producer to increase or decrease the output and the producer will be said to be at equilibrium.