Question

Suppose that a firm in a perfectly competitive industry finds that at its current output​ rate, marginal revenue exceeds the minimum average total cost of producing any feasible rate of output.​ Furthermore, the firm is producing an output rate at which marginal cost is less than the average total cost at that rate of output.
Part 2
Is the firm maximizing its economic​ profits?
A.
​Yes, marginal revenue exceeds the minimum average total cost of producing any feasible rate of output.
B.
​No, if the firm was maximizing its economic profits the marginal cost would not be less than the average total cost at that rate of output.
C.
​No, the firm is producing where average total cost are a minimum.
D.
It is impossible to draw a conclusion from the given information.
E.
​No, the marginal cost is less than the average​ cost, so the average cost must be declining at the output level where the firm is producing.

Answer 1

B. ​No, if the firm was maximizing its economic profits, the marginal cost would not be less than the average total cost at that rate of output.