Explain the relationship between marginal revenue and total reven… - Vidyadip

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Explain the relationship between marginal revenue and total revenue.

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Read the following text carefully and answer the questions 1-2 on the basis of the same:
A firm produces and sells a certain amount of a good. The firm's profit is defined to be the difference between its total revenue (TR) and its total cost of production (TC). Profits are the difference between total revenue and total cost. Both total revenue and total cost increase as output increases. The gap between TR and TC is the firm's earnings net of costs. A firm wishes to maximise its profit. The firm would like to identify the quantity qo at which its profits are maximum. By definition, then, at any quantity other than qo, the firm's profits are less than at q. As long as the change in total revenue is greater than the change in total cost, profits will continue to increase.
-NCERT, 2022-23
1. Define producer's equilibrium. State the conditions of producer's equilibrium for a competitive firm.
2. Will a firm continue to produce even if it is incurring losses under perfect competition? Do you agree?

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The following table shows the total cost schedule for a competitive firm. It is given that the price of the good is ₹ 10. Calculate the profit at each output level. Find the profit-maximizing level of output.

Output	TC (₹)
0	5
1	15
2	22
3	27
4	31
5	38
6	49
7	63
8	81
9	101
10	123