Equilibrium of firm

Equilibrium of the firm:

Equilibrium of the firm

Equilibrium refers to a point of rest or the stage in which the opposing forces are in balance. Whenever a firm attains a stage from which it does not want to move forward or backward, it is said to be in equilibrium.

           According to Hansen, “A firm will be in equilibrium when it has no advantage to increase or decrease the output."

 Thus, we can conclude that when a firm is earning a maximum profit or minimizing the loss, it is said to be in equilibrium. There are two methods or approaches for the determination of equilibrium of a firm which is as follows:-

1. Total revenue and the total cost approach (TR-TC approach)
2. Marginal revenue and Marginal cost approach (MR-MC approach)

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