A perfectly-competitive firm produces 2,000 units of a good during some period of time. For the 2,000th unit, marginal cost is equal to marginal revenue. The difference between marginal revenue and marginal cost is greater for the first unit the firm produces than the second, and greater for the second than the third, and so on. Furthermore, marginal revenue is greater than marginal cost for every unit from the first to the 1,999th. It follows that the

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Since marginal cost is equal to marginal revenue for the 2,000th unit, we know that the marginal cost curve intersects the marginal revenue curve at the point where the firm produces 2,000 units. Since marginal revenue is greater than marginal cost for every unit from the first to the 1,999th, the marginal revenue curve must lie above the marginal cost curve for all those units. This means that the marginal cost curve must be upward-sloping for those units, and since the marginal cost curve intersects the marginal revenue curve at the 2,000th unit, it must be upward-sloping beyond that point as well. Therefore, choice C is the best answer.

A Perfectly-Competitive Firm Produces 2,000 Units of a Good During