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

question 164

Multiple Choice

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.

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Definitions:

Example

A representative part or a single item from a larger whole or group, especially when used to illustrate or explain a topic.

Inherent Zero

A zero point that indicates an absence of the quantity under measurement, giving a true zero value meaning in the context.

Ratio Scale

A scale of measurement that has a meaningful zero value and allows for comparisons of absolute magnitudes and the computation of ratios.

Measurement

The process or the result of quantifying the characteristics or properties of something, usually by comparing it to a standard.