Concept:A firm reaches equilibrium when it earns maximum profit.
This happens when its marginal revenue equals its marginal cost.
Explanation:Marginal revenue is the extra income from selling one additional unit.
Marginal cost is the extra expense of producing that additional unit.
If
MR>MC, producing one more unit adds more to revenue than to cost, so the firm should increase output.
If
MR<MC, the last unit adds more to cost than to revenue, so the firm should reduce output.
Profit is maximised only when the gain from the last unit is exactly balanced by its cost.
Thus, the necessary equilibrium condition is:
MR=MCTherefore, marginal revenue must be equal to marginal cost.
Answer:B. equal to marginal