If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then
A)its total cost is more than $9,000.
B)its marginal revenue is less than $10.
C)its average total cost is less than $10.
D)the firm cannot be a competitive firm because competitive firms cannot earn positive profits.

Question

Quizplus · Accepted Answer

In a competitive market, if a firm is earning a positive profit, it means that the price (which equals marginal revenue for competitive firms) is greater than the average total cost. Since the firm sells its product at $10 per unit and is making a profit, its average total cost must be less than $10.

If a Competitive Firm Is Selling 900 Units of Its