Answer to Question #259244 in Microeconomics for abccc

Question

The wage rate of labor is Rs. 6 and price of capital is Rs. 2. The marginal product of labor is 16 while marginal product of capital is 4. Can a firm be operating at equilibrium?     

Answer 1

               When an organization is in balance, it is content with its current level of production. In this scenario, the corporation will yield the standard of output that results in the maximum earning or the simplest absence. The firm is considered to be in balance when this condition is met.

               In this case, the business may not be functioning at a steady-state since it is not producing maximum earnings as a result of the discrepancy between total revenue and total cost. It must meet two requirements in order to do so: (1) MC = MR, and (2) at the moment of equivalency, the MC contour must intersect the MR curve from beneath and then ascend higher.