Question

Find producer's equilibrium, from the following. Give logical reason.

Quantity Sold (Units)	Total Revenue (Rs.)	Total Cost (Rs.)
$5$ $6$ $7$ $8$ $9$ $10$	$15$ $20$ $25$ $30$ $35$ $40$	$18$ $22$ $26$ $27$ $32$ $38$

Answer 1

Quantity Sold (Units)	Total Revenue (TR)(Rs.)	Total Cost (TC) (Rs.)	Marginal Revenue (MR)(Rs.)	Marginal Cost (MR) (Rs.)	Profit $(\pi =TR-TC)(Rs.)$
$5$ $6$ $7$ $8$ $9$ $10$	$15$ $20$ $25$ $30$ $35$ $40$	$18$ $22$ $26$ $27$ $32$ $38$	- $5$ $5$ $5$ $5$ $5$	- $4$ $4$ $1$ $5$ $6$	$-3$ $-2$ $-2$ $3$ $3$ $2$

Producer is in equilibrium at $9th$ unit of output.
Reason: At output levels $8th$ and $9th$ unit,the difference between $TR$ and $TC$, i.e., profit is maximum, which is equal to $3$ in both the cases. But the producer is in equilibrium at $9th$ unit only where $MR=MC(=5)$, and $MC$ is rising.