If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, 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 cost exceeds marginal revenue, reducing output by one unit will decrease total cost more than total revenue, thus increasing profit.

If a Competitive Firm Is Currently Producing a Level of Output