If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then
A)its average revenue is greater than $8.
B)its marginal revenue is less than $8.
C)its total cost is less than $4,000.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

In a competitive market, the price equals both average revenue and marginal revenue, so A and B are incorrect. Since the firm is earning a positive profit, its total cost must be less than its total revenue, which is $4,000 (500 units x $8).

If a Competitive Firm Is Selling 500 Units of Its