If a competitive price-taker firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
A) average revenue exceeds marginal cost.
B) the firm is earning a positive profit.
C) a one-unit decrease in output would increase the firm's profit.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

When marginal cost exceeds marginal revenue, reducing output by one unit will increase profit because it will eliminate the loss incurred on that unit.

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