Production and cost — Economics STD 11 Commerce — Question

A producer is said to be in equilibrium when he produces that level of output at which:

1. MC = MR
2. MC > MR after the MC = MR output level

Explanation to the conditions:Condition 1: MC = MR
Suppose when a producer starts producing a good, with the given factors and finds MR > MC he goes on producing because every new unit produced adds to profits. As he goes on producing more units of the good he may face an output level when MC = MR and this output level satisfies MC = MR condition of equilibrium. Condition - 2 MC > MR after the MC=MR output level After MC = MR level, if MC > MR, every new unit produced is sold at a loss. So, he would not like to produce more units thereafter. Therefore, only that output level at which MC = MR, and beyond which MC > MR, is the output at which the producer is in equilibrium.