What conditions must hold if a profit-maximizing firm produces positive output in a competitive market?

6

(a)

Explain the producer's equilibrium with MR/MC approach (when Price remains constant with the rise in output).

6

(a)

Explain the conditions of a producer's equilibrium in terms of marginal cost and marginal revenue. Use diagram

6

(a)

Elaborate the implication of the conditions of equilibrium of a firm

6

(a)

Explain why will a producer not be in equilibrium if the conditions of equilibrium are not met.

6

(a)

The following table shows the total cost schedule of a competitive firm. It is given that the price of the goods is Rs10. Calculate the profit at each output level. Find the profit maximising level of output.

Output Sold	0	1	2	3	4	5	6	7	8	9	10
TC (in Rs)	5	15	22	27	31	38	48	63	81	101	123

6

(a)

Explain producer's equilibrium with the help of MC and MRschedules. Use Diagram.

6

(a)

Why is the equality between marginal cost and marginal revenue necessary for a firm to be in equilibrium? Is it sufficient to ensure equilibrium? Explain

6

(a)

From the following schedule find out the level of output at which the producer is in equilibrium. Calculate profit. Give reasons for your answer.

Output (Units)	1	2	3	4	5	6	7
Price (Rs)	24	24	24	24	24	24	24
Total cost(Rs)	26	50	72	92	115	139	165

6

(a)

Giving reasons identify the equilibrium level of output and find profit at this output using 'Marginal Cost and Marginal Revenue' approach from the following:

Output(Units)	1	2	3	4	5
Total Cost(Rs)	7	13	20	28	37
Total Revenue(Rs)	7	14	21	28	35

6

(a)