How is equilibrium established under monopoly?

The necessary condition of equilibrium is the equality of marginal cost and marginal rev­enue. The same condition applies to monopoly also. Therefore equilibrium of a monopoly firm is estab­lished at a point where MC is equal to MR.

However, the following points should be noted with regard to short-run and long-run equilibrium.

(i) In the short period a monopoly firm can also sustain losses.

(ii) In the long run a monopoly firm can have abnormal profits. (AR > AC) which is not possible in the case of a competitive firm.