Revenue and Producer's Equilibrium — Part 2: Producer's Equilibrium: visual lesson, ISC Class 12 Economics

Lesson

Producer's Equilibrium

Part 2 — the output at which a producer maximises profit, by the TR–TC and the MR–MC approaches.

In this lesson you will

Find the profit-maximising output by the TR–TC approach from a schedule and a diagram
State and apply the two conditions of the MR–MC approach
Explain why both approaches give the same equilibrium output

Part 2 at a glance

Concept

Both give the same output.
Approach	Equilibrium condition	Where seen
TR–TC	Largest positive TR − TC	Biggest vertical gap between TR and TC
MR–MC	MR = MC and MC rising	MC cuts MR from below

Diagram

Equilibrium where TR lies furthest above TC; the crossings are break-even points.

Equilibrium is where TR lies furthest above TC. Where the curves cross, profit is zero (break-even).