class 12 economics Producer's equilibrium notes

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 Producer's equilibrium..........short and easy notes for board exam.



1. What do you mean by firm's equilibrium?
> Equilibrium means absence of change. A firm is in equilibrium when he maximizes his profit.
               A firm in perfect competition, can produce any quantity at a given price because a perfect competition firm is price taker and quantity adjuster. Hence, in perfect competition, TR curve slopes downward from left to right.
                In monopoly and monopolistic competition, a producer can only sale more when he can reduce the price. In this state, a producer can fix the price and quantity both.

POINTS;
  • A firm is equilibrium when MR = MC or Marginal Revenue = Marginal Cost.
  • A producer is in equilibrium when he maximizes his profit.
  • At break even point, MR = MC.

THE END


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