A Competitive Price-Searcher Firm Is Currently Producing 10 Units of Output

A competitive price-searcher firm is currently producing 10 units of output. At this level of output the firm is charging a price equal to $10, has marginal revenue equal to $6, has marginal cost equal to $6, and has average total cost equal to $12. From this information we can conclude that

A) the firm is currently earning zero profit.
B) the profits of the firm are negative.
C) firms are likely to enter this market in the long run.
D) the firm would earn more profit by reducing output.

Correct Answer:

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