From the following data find out the level of output at which the prod – InterviewSolution

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1.

From the following data find out the level of output at which the producer is in equilibrium. Give reasons for your answer. (Use Marginal Cost and Marginal Revenue approach).Output (Units)Total Revenue (in Rs.)Total Cost (in Rs.)1234512243648601426364862

Answer»

Output (Units)	TR in Rs.	TC in Rs.	MR in Rs.	MC in Rs.
1 2 3 4 5	12 24 36 48 60	14 26 36 48 62	12 12 12 12 12	14 12 10 12 14

The equilibrium is at 4 units of output.

Reasons:

(1) At this Level of output MR = MC

(2) MC > MR after equilibrium output.

Discussion

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