Why equilibrium is not struck when MR > MC? - Vidyadip

Question

Why equilibrium is not struck when MR > MC?

✓

Answer

In a situation when MR > MC, the addition to revenue is greater than the addition to cost if a firm expands its production. Accordingly, expansion of production (when MR > MC) would take the firm to a higher level of profit. Implying that the firm will not strike equilibrium so long as MR > MC.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "2 Marks Question" from MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM→MICROECONOMICS CH : 10 PRODUCER'S EQUILIBRIUM — all question types→Economics STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

Starting from the initial situation of consumer's equilibrium, suppose that the marginal utility of a rupee increases. Will it increase or decrease the quantity demanded of a product?

What is the relation between Good-X and Good-Y, if with rise in the price of Good-X, demand for Good-Y rises? Give an example.

What are the total fixed cost, total variable cost and total cost of a firm? How are they related?

What is a production possibility frontier?

Give the properties of production possibility curve.

Define decrease in demand. What causes decrease in demand?

"Petrol is becoming cheaper, yet the demand for cars is not rising."
Does it mean that the law of demand is not operative?

How is the market demand curve derived from the individual demand curves?

Owing to political considerations, Russia has banned the import of seafood from the European Countries. How would you analyse the impact of this decision (i) on the export of seafood from the Indian market, and (ii) on the domestic supplies of seafood in India?

"Petrol is becoming cheaper, yet the demand for cars is not rising."
Does it mean that the law of demand is not operative?