If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output
A)marginal revenue is less than price.
B)marginal revenue exceeds ATC.
C)ATC is being minimized.
D)total revenue equals total cost.

Question

Quizplus · Accepted Answer

Marginal revenue exceeding ATC (average total cost) at the output level where P = MC (price equals marginal cost) indicates that the firm is covering all its costs and earning an economic profit. This is because the price (which equals MR in perfect competition) is higher than the average total cost at that output level.

If a Purely Competitive Firm Is Producing at the P