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Question

On the basis of the information given below, determine the level of output at which the producer will be in equilibrium. Use the marginal cost - marginal revenue approach. Give reasons for your answer.

$\begin{matrix} Output (Units) & Average Revenue (Rs) & Total Cost (Rs.) 1 & 7 & 8 2 & 7 & 15 3 & 7 & 21 4 & 7 & 26 5 & 7 & 33 6 & 7 & 41 \end{matrix}$

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Solution

$\begin{matrix} Output (Units) & AR (Rs) & TC (Rs) & MC (Rs) & MR (Rs) 1 & 7 & 8 & 8 & 7 2 & 7 & 15 & 7 & 7 3 & 7 & 21 & 6 & 7 4 & 7 & 26 & 5 & 7 5 & 7 & 33 & 7 & 7 & Equilibrium 6 & 7 & 41 & 8 & 7 & 1 \end{matrix}$

The producer achievers equilibrium at 5 units of output. It is because this level of output satisfies both the conditions of producer's equilibrium : 1

(i) Marginal cost is equal to marginal revenue. 1

(ii) Marginal cost becomes greater than MR after this level of output. 11, also because Ar is constant MR=AR

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Q. From the table given below, determine the level of output at which the producer is in equilibrium. Use the marginal revenue and marginal cost approach. Given reasons for your answer.

Output (Units)	Price (Rs.)	Total cost (Rs.)
$1$	$5$	$7$
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$3$	$5$	$16$
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Q. From the following table, find out the level of output at which the producer will be in equilibrium (use marginal) cost and marginal revenue approach). Give reasons for your answer.

Output (Units)	$1$	$2$	$3$	$4$	$5$
Total Revenue (Rs.)	$16$	$30$	$42$	$52$	$60$
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Q. From the following information about a firm, find the firm's 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.)
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Q. Using marginal cost and marginal revenue approach, find out the level of output at which producer will be in equilibrium. Give reasons for your answer.

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