Givethe meaning of producer's equilibrium .A producer that quantityof hisproductatwhichmarginal costrevenue are equal . Is he earning maximum profit?

Givethe meaning of producer's equilibrium .A producer that quantityof

1.	Givethe meaning of producer's equilibrium .A producer that quantityof hisproductatwhichmarginal costrevenue are equal . Is he earning maximum profit?
Answer» Solution :A producer (FIRM) is SAID to be in equilibrium when thefirmis producingthat quantity ofoutput whichgivesthe firm maximum PROFIT. Fora firmto be inequilibrium costequals marginal revenue. Second along withthefirst condition isthat MCmustbegreaterthan MRbeyond thelevelof output at which MC=MR. Thereforefulfillmentof thefirst condition alonedoes notensuremaximum profits . It ispossiblethatMC =MRcondition may befulfilled at morethan oneoutput LEVELS but onlythatoutput levelbeyondwhich`MC gt MR` is themaximumprofitoutput level.