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Question

Define producer's equilibrium "when price remains constant".

Solution
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When price remains constant, firms can sell any quantity of output at the price fixed by the market. Price or AR remains same at all levels of output. Also, the revenue from every additional unit (MR) is equal to AR. It means, AR curve is same as MR curve. Producer aims to produce that level of output at which MC is equal to MR and MC is greater than MR after MC=MR output level.

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