According to the law of conservation of mass 'Mass can neither be created nor be destroyed' Therefore The mass should be balanced on the both sides of reaction and for this, number of atom of each kind must be equal in both sides. Therefore it's necessary to balance a chemical reaction.
In Fe2O3 The oxidation state of Oxygen is -2. Let x be the oxidation state of Fe. Therefore Oxidation state of iron can be calculated as:
2x - 3(-2)= 0
2x = 6
therefore x = 3.
Therefore iron is present in +3 oxidation state and name of the compound is Iron(III)oxide.
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