Elaborate the implication of the conditions of equilibrium of a firm.

1.	Elaborate the implication of the conditions of equilibrium of a firm.
Answer» SOLUTION :Firm's EQUILIBRIUM is that level of output where its profits are maximised. Conditions of Firm's Equilibrium: (i) Marginal Revenue must b equaltoMarginal Cost. (ii) Marginal Cost mustbe rising. The conditions IMPLIES that the slope of rising Marginal Cost Curve is EQUAL to the slope of Marginal Revenue curve. Implication of the conditions lies in the fact that beyond the equilibrium point E, MC WOULD become greater than MR i.e., for each additional unit sold beyond output OQ, the cost of producing that unit will be more than the revenue generated by the unit.

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