Whilst charge stays constant companies can sell any quantity of output at the fee constant by way of the market. AR stays equal in any respect levels of output and additionally revenue from every additional unit (MR) is identical to AR. the following 3 conditions must maintain if a income maximizing company produces high quality degree of output (say equilibrium output Q*) in a aggressive marketplace:
i. MR must be equal to MC at Q*.
ii. MC should be upward sloping or rising at Q*.
iii. In short run-Price must be greater than or equal to AVC .i.e. P > AVC at Q*. In long run - Price must be greater than or equal to LAC.