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11 January, 05:11

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a. a one-unit increase in output will increase the firm's profit. b. a one-unit decrease in output will increase the firm's profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue.

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  1. 11 January, 05:23
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    The correct answer is the letter c. Total revenue exceeds total cost.

    Explanation:

    In a competitive environment, profit maximization occurs when marginal revenue equals price, which equals marginal cost. Thus, when marginal revenue exceeds marginal cost, it means that the company's revenue is exceeding costs, generating profit. In the long run, in the competitive environment, other firms will enter the market to make higher profits in this market, returning to the maximizing equilibrium.
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