Explain the conditions of producer's equilibrium in terms of marginal revenue and marginal cost.

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Solution

Firstly, MC = MR is a necessary condition of producers equilibrium as this the point when profits are maximized.
Secondly, if the MC increases further because of increase in quantity produced, then MC > MR. Essentially, this would mean a fall in profits.
These two conditions are necessary for explaining the producer's equilibrium using MC and MR.

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Output (Units)	Total Revenue (Rs.)	Total Cost (Rs.)
$1$ $2$ $3$ $4$ $5$	$6$ $12$ $18$ $24$ $30$	$7$ $13$ $17$ $23$ $31$

Output (Units)	Total Revenue (Rs.)	Total Cost (Rs.)
$1$ $2$ $3$ $4$ $5$	$8$ $16$ $24$ $32$ $40$	$10$ $18$ $23$ $31$ $41$

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