<p>The MC curve can only be seen as a supply schedule for the individual firm if it is a price taker. In the case you depicted, however, we have imperfect competition. A profit-maximizing firm will thus produce where MR=MC, and charge a price that will induce consumers to purchase this quantity (which can be read off the demand schedule). In this sense, there is no "disequilibrium": the firm is doing the best it can (so it has no reason to change), and total quantity demanded is equal to total quantity supplied (i.e. there is market equilibrium). </p>

CC BY-SA 3.0
2015-02-24T20:14:39.570Z
So for a market without perfect competition - this example could represent a monopoly or monopolistic competition, let's say - the market price and quantity supplied is determined not always naïvely by the intersection of the demand curve for the firm's product and the firm's supply curve?
abhishek
CC BY-SA 3.0
2015-02-24T20:23:09.157Z
And perhaps more generally, can the market equilibrium be determined by the intersection of the demand and supply curves only in the case of perfect competition?
abhishek
CC BY-SA 3.0
2015-02-24T16:00:16.663Z
2015-02-24T16:00:16.663Z
econguest123
<p>For almost all demand curves, the resulting marginal revenue curve is often to the left of and steeper than the demand curve. The marginal cost curve has its distinctive U-shape, and a particular portion of the marginal cost curve is the supply curve. So the result can be shown below:
<img src="https://i.sstatic.net/6hKLl.png" alt="enter image description here"></p>

<p>The figure above indicates that in almost any case, because MR is to the left of D, if a firm produces the quantity at market equilibrium, MR &lt; MC, which means that the firm would be actively losing profits.  So, why do firms even bother going to market equilibrium - from a theoretical standpoint?</p>

<microeconomics><supply-and-demand>
Why do firms bother to produce at equilibrium quantities if at equilibrium quantity, MR < MC?
abhishek
# Why do firms bother to produce at equilibrium quantities if at equilibrium quantity, MR < MC?

(Asked by: username_0 on 2015-02-24)

For almost all demand curves, the resulting marginal revenue curve is often to the left of and steeper than the demand curve. The marginal cost curve has its distinctive U-shape, and a particular portion of the marginal cost curve is the supply curve. So the result can be shown below:
![enter image description here](https://i.sstatic.net/6hKLl.png)

The figure above indicates that in almost any case, because MR is to the left of D, if a firm produces the quantity at market equilibrium, MR < MC, which means that the firm would be actively losing profits. So, why do firms even bother going to market equilibrium - from a theoretical standpoint?

**Tags:** microeconomics, supply-and-demand


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## 1 answers

### Answer by username_1 on 2015-02-24. Score: 5

The MC curve can only be seen as a supply schedule for the individual firm if it is a price taker. In the case you depicted, however, we have imperfect competition. A profit-maximizing firm will thus produce where MR=MC, and charge a price that will induce consumers to purchase this quantity (which can be read off the demand schedule). In this sense, there is no "disequilibrium": the firm is doing the best it can (so it has no reason to change), and total quantity demanded is equal to total quantity supplied (i.e. there is market equilibrium).

> **Comments:**
> **username_0**: So for a market without perfect competition - this example could represent a monopoly or monopolistic competition, let's say - the market price and quantity supplied is determined not always naïvely by the intersection of the demand curve for the firm's product and the firm's supply curve?  
> **username_0**: And perhaps more generally, can the market equilibrium be determined by the intersection of the demand and supply curves only in the case of perfect competition?  

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