When a firm's total revenue exceeds its total cost:

Question

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When a firm's total revenue exceeds its total total cost, it means the firm is making a profit. This does not necessarily relate directly to the behavior of average revenue, total cost with output, or marginal cost being negative. However, in general, as a firm increases output, its total costs typically rise due to the costs associated with producing additional units. This is a basic principle of production where initially, costs may rise at a decreasing rate due to increasing returns to a factor, but eventually, they rise at an increasing rate due to the law of diminishing returns.

When a Firm's Total Revenue Exceeds Its Total Cost