{"id":23880,"date":"2022-01-31T22:10:14","date_gmt":"2022-01-31T22:10:14","guid":{"rendered":"https:\/\/infinitylearn.com\/surge\/?p=23880"},"modified":"2022-01-31T22:10:14","modified_gmt":"2022-01-31T22:10:14","slug":"producer-equilibrium-cbse-notes-for-class-12-micro-economics","status":"publish","type":"post","link":"https:\/\/infinitylearn.com\/surge\/study-material\/cbse-notes\/class-12\/micro-economics\/producer-equilibrium-cbse-notes-for-class-12-micro-economics\/","title":{"rendered":"Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics"},"content":{"rendered":"

Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics<\/strong><\/span><\/h2>\n

 <\/p>\n

Introduction<\/strong><\/p>\n

This chapter contains essentially the concept of producer equilibrium with marginal revenue and marginal cost approach, both when price is constant and when price is falling along with the numericals.<\/p>\n

1. Profit<\/strong> 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).
\nFor 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.
\n2. A producer<\/strong> is said to be in equilibrium when he produces that level of output at which his profits are maximum. Producer\u2019s equilibrium is also known as profit maximisation situation.
\n3. There are two methods for determination of Producer\u2019s Equilibrium:<\/strong>
\n(a) Total Revenue and Total Cost Approach (TR \u2013 TC Approach)
\n(b) Marginal Revenue and Marginal Cost Approach (MR \u2013 MC Approach)
\n4. A firm produces and sells<\/strong> a certain amount of a good. The firm\u2019s profit, denoted by \u03c0, is defined to be the difference between its total revenue (TR) and its total cost of production (TC). In other words, \u03c0= TR \u2013 TC
\n\"producer-equilibrium-cbse-notes-class-12-micro-economics-1\"
\n5. Producer\u2019s equilibrium<\/strong> when price is constant with a rise in output under MR\/MC approach is determined where,
\n(a) MR = MC (b) MC must be rising According to Table, both the conditions of equilibrium are satisfied at 4 units of output. MC is equal to MR and MC is rising. MC is more than MR when output is produced after 4 units of output. So, Producer\u2019s Equilibrium will be achieved at 4 units of output.
\nHowever, MR is equal to MC at 2 units of output also.
\nBut, second condition is not fulfilled here.
\nLet us understand the determination of equilibrium o with the help of a diagram.
\nProducer\u2019s Equilibrium is determined at OQ level of \u00abP output corresponding to point E as at this point, MC MR and MC curve cuts MR curve from below.
\n\"producer-equilibrium-cbse-notes-class-12-micro-economics-2\"
\nIn Figure, output is shown on the horizontal axis and \u00a3 revenue and costs on the vertical axis. Producer\u2019s Q Units Sold
\nequilibrium will be determined at OQ level of output corresponding to point E because at this, the following two conditions are met:
\n(a) MC = MR; (b) MC curve cuts the MR curve from below.
\nWhen MR > MC, then producer will continue to produce as long as MR becomes equal to MC. It is so because firm will find it profitable to raise the output level.
\nWhen MR < MC, then producer will cut down the production as long as MR becomes equal to MC. It is so because firm will find it Unprofitable to produce an extra unit. So, it starts reducing the level of output till MR = MC.
\n6. Producer\u2019s equilibrium<\/strong> when price fall with a rise in output under MR\/MC approach is determined where,
\n(a) MR = MC (b) MC must be rising When price falls with the rise in output, MR curve slope downwards. Let us understand this with the help of following table:
\n\"producer-equilibrium-cbse-notes-class-12-micro-economics-3\"
\nAccording to Table, both the conditions of equilibrium are satisfied at 4 units of output.
\nMC is equal to MR and MC is rising. MC is more than MR when output is produced
\nafter 4 units of output. So, Producer\u2019s Equilibrium will be achieved at 4 units of output.
\nLet us understand the determination of equilibrium ^ with the help of a diagram:
\n\"producer-equilibrium-cbse-notes-class-12-micro-economics-4\"
\nProducer\u2019s Equilibrium is determined at OQ level of output corresponding to point E as at this point, MC = MR and MC curve cuts MR curve from below.
\nIn Figure, output is shown on the horizontal axis and revenue and costs on the vertical axis. Producer\u2019s equilibrium will be determined at OQ level of output g corresponding to point E because at this, the following two conditions are met: OQ Units Sold
\n(a) MC = M, and (b) MC curve cuts the MR curve from below.
\nWhen MR > MC, then producer will continue to produce as long as MR becomes equal to MC. It is so because firm will find it profitable to raise the output level.
\nWhen MR < MC, then producer will cut down the production as long as MR becomes equal to MC. It is so because firm will find it Unprofitable to produce an extra unit. So, it starts reducing the level of output till MR = MC.
\nSo, the producer is at equilibrium at OQ units of output.<\/p>\n

Words that Matter<\/strong><\/p>\n

1. Profit:<\/strong> Profit refers to the excess of revenue over cost.
\n2. Producer\u2019s equilibrium:<\/strong> A producer is said to be in equilibrium when he produces that level of output at which his profits are maximum. Producer\u2019s equilibrium is also known as profit maximisation situation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics   Introduction This chapter contains essentially the concept of producer […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_yoast_wpseo_focuskw":"","_yoast_wpseo_title":"","_yoast_wpseo_metadesc":"Get Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics on Infinity Learn.","custom_permalink":"study-material\/cbse-notes\/class-12\/micro-economics\/producer-equilibrium-cbse-notes-for-class-12-micro-economics\/"},"categories":[92,21],"tags":[],"table_tags":[],"acf":[],"yoast_head":"\nProducer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics - Infinity Learn by Sri Chaitanya<\/title>\n<meta name=\"description\" content=\"Get Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics on Infinity Learn.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infinitylearn.com\/surge\/study-material\/cbse-notes\/class-12\/micro-economics\/producer-equilibrium-cbse-notes-for-class-12-micro-economics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Producer Equilibrium \u2013 CBSE Notes for Class 12 Micro Economics - 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