Giving reasons identify the equilibrium level of output and find profit at this output using ‘Marginal Cost and Marginal Revenue’ approach from the following.

Here,

TR = Total Revenue
TC = Total Cost
MR = Marginal Revenue
MC = Marginal Cost

The conditions for reaching equilibrium level of output are as follows:

(A) Marginal Cost = Marginal Revenue

(B) Marginal cost must be increasing

Thus, the producer reaches the equilibrium at an output of 3 units as at that level, both conditions of the equilibrium are met.