If a purely competitive firm is producing a level of output greater than its profit-maximizing output, then its profits must be negative.

Question

Quizplus · Accepted Answer

A purely competitive firm producing more than its profit-maximizing output may still have positive profits, but it is not maximizing its potential profits. The firm's total revenue may exceed its total costs, resulting in positive profits, even though it's not operating at the most efficient output level.

If a Purely Competitive Firm Is Producing a Level of Output