Why is the equality between mc …
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Yogita Ingle 5 years, 11 months ago
Equilibrium refers to a state of rest when no change is required. A firm (producer) is said to be in equilibrium when it has no inclination to expand or to contract its output. This state either reflects maximum profits or minimum losses.
According to MC=MR approach, As long as MC is less than MR, it is profitable for the producer to go on producing more because it adds to its profits. He stops producing more only when MC becomes equal to MR.
When MC is greater than MR after equilibrium, it means producing more will lead to decline in profit.
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