If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then a. its average revenue is greater than $8. b. its total cost is less than $4,000. c. its marginal revenue is less than $8. d. All of the above are correct.

Question

Junior Mack

Business

24 October, 04:40

If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then a. its average revenue is greater than $8. b. its total cost is less than $4,000. c. its marginal revenue is less than $8. d. All of the above are correct.

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Answers (2)

Know the Answer?

Addisyn Bowen · Answer 1

B. its total cost is less than $4,000

Dayton Shields · Answer 2

Answer: B) Its total cost is less than $4000

Explanation:

If a competitive firm is selling 500 units of its product at a price of $8 per unit, its total sales of 500units will be $8 * 500 which is $4,000. Since the firm earns a positive profit, this means that its total cost is less than $4000

Since a positive profit was made, it means the total sales (selling price) is definitely greater than cost price. If the cost price is greater than selling price, it means a loss was generated (negative profit) which is not the case here.