The necessary condition for a firm to be in equilibrium is that marginal revenue is

Analyze the question: The question asks for the necessary condition for a firm to be in equilibrium. The options are truncated: "marginal" most likely means marginal cost, and "average" most likely means average cost or average revenue.

Concept: A firm is in equilibrium when it has no incentive to change its output, meaning profit is maximised (or loss minimised). Economists give two conditions:

1. Necessary (first-order) condition: Marginal Revenue (MR) = Marginal Cost (MC)
2. Sufficient (second-order) condition: MC must cut MR from below, so MC is rising at the point of equilibrium.

Step-by-step reasoning:

• If MR > MC, producing one more unit adds more to revenue than to cost. The firm should expand output, so it is not in equilibrium.
• If MR < MC, the last unit costs more than it earns. The firm should cut output, so it is not in equilibrium.
• If MR = MC, there is no gain from changing output. The firm is in equilibrium.

Checking the options:

• A. MR greater than MC: the firm would still expand, so this is wrong.
• B. MR equal to MC: this is the necessary condition, so it is correct.
• C. MR less than AR: this is true for a monopolist at any output, but it is not an equilibrium condition.
• D. MR equal to average cost or revenue: this holds only at special points, such as the minimum of AC, and is not the general condition.

**Answer: B.

Exam tip: Remember "MR = MC" as the golden rule of profit maximisation. The necessary condition is MR = MC, and the sufficient condition is that the MC curve cuts the MR curve from below. WASSCE often tests both, so learn them as a pair.