CMA Study Group

Equilibrium - Pricing Strategies Part 2

  • 1.  Equilibrium - Pricing Strategies Part 2

    Posted 8 days ago
    Is equilibrium price and quantity where demand curve intersects with supply curve? Or, is it the point where marginal revenue equals marginal cost?

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    Nupur Mahajan
    nupur1188@...
    Hartford CT United States
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  • 2.  RE: Equilibrium - Pricing Strategies Part 2

    Posted 7 days ago
    Hi Nupur,

    As the name suggests, equilibrium is where things are in balance. In economics, balance is where the cost of producing one additional unit is equal to the revenue realized from its sale. Any point before or after is out of equilibrium as one of the two would be out of the equilibrium.

    If you were to draw a perpendicular line from the X-axis all the way up to the point to the demand curve, that is where the final quantity would produce total revenue. If you draw a curve representing Average Revenue, the area parallels to the X-axis from the intersection of that point and upwards will represent the economic profit from that level of production. (I have used Monopolistic competitions' example as it has different scenarios for cost and revenue. In case of perfect competition, MR=AR=P. Hence things are much simpler)

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    Harjjeet Gahla (ACS LLB DBF ADM)
    FInancial Controller / Accountant
    Calgary Alberta
    Canada
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  • 3.  RE: Equilibrium - Pricing Strategies Part 2

    Posted 7 days ago
    Please add me to your WhatsApp group for CMA.
    My number is +91 7356713160





  • 4.  RE: Equilibrium - Pricing Strategies Part 2

    Posted 6 days ago
    Hi, my name is Sandeep. have created a group for study.
    +971 50 8582289. if there is already a group, request to add.
    I am appearing for exam in June

    Thanks
    Sandeep

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    Sandeep Pandey

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