Page 1 - H. A Producer's equilibrium

SAI INTERNATIONAL SCHOOL

ECONOMICS

Class-XI

[MICRO ECONOMICS]

CHAPTER -8

PRDUCERS EQUILIBRIUMModule-71

TOPIC:

---Introduction

---MC & MR approach of producer’s equilibrium

under perfect competition market

SHORT NOTES

Profit refers to the excess of money receipts from the sale of goods and
services (i.e, revenue) over the expenditure incurred on producing them
(i.e, cost).

For example, if a firm sells goods for Rs. 5 crores after incurring an
expenditure of Rs. 3 crores, then profit will be Rs. 2 crores.
2. A producer is said to be in equilibrium when he produces that level of
output at which his profits are maximum. Producer’s equilibrium is also
known as profit maximisation situation.

3. There are two methods for determination of Producer’s
Equilibrium:
(a) Total Revenue and Total Cost Approach (TR – TC Approach)
(b) Marginal Revenue and Marginal Cost Approach (MR – MC Approach)
4. A firm produces and sells a certain amount of a good. The firm’s
profit, denoted by π, is defined to be the difference between its total
revenue (TR) and its total cost of production (TC). In other words, π= TR –