If a competitive price-taker 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.

Question

Quizplus · Accepted Answer

When marginal revenue exceeds marginal cost, producing an additional unit will increase profit because the revenue from selling that unit is greater than the cost of producing it.

If a Competitive Price-Taker Firm Is Currently Producing a Level