 short-run equilibrium under monopolistic competition. If a firm is operating under monopolistic competition, objective of the firm is to maximize profit. He can maximize his profit by producing and a level of output where marginal cost is equal to marginal revenue. When you say equilibrium price under monopolistic competition, equilibrium quantity under monopolistic competition, then equilibrium quantity basically refers to that level of the quantity where marginal revenue is equal to marginal cost. At the point where your marginal revenue is equal to marginal cost, we will say that is the equilibrium quantity. And the price firm that can charge against that equilibrium quantity that price is called as equilibrium price. And what we will determine on this price is that whatever quantity we have found out on the basis of marginal cost is equal to marginal revenue point against, the quantity against which the price firm will charge, we will determine on the basis of demand curve. We will determine on the basis of average revenue curve. We will say that is the equilibrium price. Now when we talk about there is a difference between demand curve and average total cost curve. The difference between demand curve and average total cost curve, which is going to indicate, it will indicate a profit. That profit is equal to price minus average total cost. And I will say that price is greater than average total cost. That the product that the firm is selling out in the market, its price is greater than average total cost than we are saying that the firm is operating under economic profit. And if we talk about there price is less than average total cost, then we say that the firm is operating under economic loss. If a firm is operating under positive profits, then what does it do? It will attract new firms, new firms in that particular business. New firms will enter in that business to produce output. And if the loss is over and the price is less than average total cost, then what will your existing firm do? They will leave the business. Under monopolistic competition, what we said that this is a market structure where there is free entry and exit. There are no barriers to entry and exit. If the price is greater than average total cost, new firms will enter. If the price is less than average total cost, some of the existing firms will leave the business. Now to understand how equilibrium level of output will be determined, we have taken any agricultural output on this diagram, that is being produced under monopolistic competition. We are reporting on vertical access, its price, average cost, marginal cost, average revenue, all those things which are denoting these curves. Yes, the average revenue curve or demand curve, these are downward sloping curves. Demand is equal to average revenue. And your marginal revenue curve, that curve is also a downward sloping curve. Slope of marginal revenue curve is double to that of slope of average revenue curve. Average cost curve is a U-shaped curve. In this diagram, the black color curved line that is the average cost curve. Then we have indicated the marginal cost curve here. And this marginal cost curve always intersects average cost curve at its minimum. Equilibrium quantity will be determined on the basis of the point where marginal cost is equal to marginal revenue. A point is such a point where marginal cost is equal to marginal revenue. The level of output of this A point is the equilibrium quantity. This is the level of output. By selling this level of output, the firm can maximize its profit. And against this equilibrium quantity, what will the firm charge the price? The firm can charge the price is equal to P e. To produce Q e output, the firm will have to determine the cost based on the basis of average cost curve. And to produce this Q e level of output, what is the average cost? That is equal to A c e. And this rectangle here is P e b f A c e. It basically indicates profit. What does this indicate? That the price is greater than average cost. If the price is greater than average cost, then it indicates the firm that is operating under monopolistic competition. It is getting positive profit. Positive profit, you know losses, where the firm will be able to observe in monopolistic competition? It can be observed if it operates under short run. What will happen in short run? The firm can take a positive profit. The loss has to be bearable. If I take the same thing, again we took the quantity on the pattern, on the horizontal axis, whatever monetary units we took on the vertical axis, again on the pattern, marginal revenue, marginal cost and average cost curve we drew here. Equilibrium level will be determined again, the point where marginal cost is equal to marginal revenue. And this level of output, the level of output against this point, that is the equilibrium quantity. And against this equilibrium quantity, what will the firm charge the price? The firm can charge the price is equal to P e. We determined that price on the basis of average revenue curve. And to produce this level of output, the cost we had to bear, we said that the firm is bearing the cost is equal to A C E. Now you can observe one thing here. Average cost to produce Q e level of output is greater than price that that firm is charging from buyer. And the fact that the firm is basically facing loss. And you will say that because of loss, there are few firms that will leave the business. Now when you talk about firm's equilibrium under short-run, we can say that it might be possible firm earns economic profit. When they earn economic profit, we can say that firm is operating under positive profit. It might be possible firm operates under economic losses. In economic loss, when the firm will have to bear loss, when price is less than average total cost. And this can be a third situation under short-run. It might be possible firm is earning normal profit. Normal profit price is equal to average cost that will prevail.