When profit-maximizing firms in competitive markets are earning profits, the most inefficient firms will be encouraged to leave the market. market supply must exceed market demand at the market equilibrium price. new firms will enter the market. market demand must exceed market supply at the market equilibrium price. Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. At Q=1,000, the firm's profits equal $3,000 $4,000. -$200. $1,000 The information below applies to a competitive firm that sells its output for $40 per unit. • When the firm produces and sells 150 units of output, its average total cost is $24.50. • When the firm produces and sells 151 units of output, its average total cost is $24.55. Suppose the firm is currently producing and selling 150 units of output. Should the firm increase its output to 151 units? No, because the average total cost exceeds the marginal revenue. No, because the marginal cost exceeds the marginal revenue. Yes, because the marginal revenue exceeds the average total cost. Yes, because the marginal revenue exceeds the marginal cost. A firm that shuts down temporarily has to pay neither its variable costs nor its fixed costs. its fixed costs but not its variable costs. both its variable costs and its fixed costs. its variable costs but not its fixed costs.