CBSE Class 12-commerce Answered
Why should MC be rising at the point of equilibrium?
Asked by Topperlearning User | 25 Apr, 2016, 02:51: PM
Expert Answer
When MC is falling, the cost of producing an additional unit of output tends to decrease. Under perfect competition, when price is constant, the difference between the total revenue and total variable cost tends to increase. This happens when the firm’s gross profit tends to increase. But a firm will not increase the output with an increasing gross profit. Therefore, the firm will be able to reach at its equilibrium output only when MC is rising.
Answered by | 25 Apr, 2016, 04:51: PM
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ANSWERED BY EXPERT
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ANSWERED BY EXPERT