An entrepreneur is likely to make more profits when
Answer Details
An entrepreneur is likely to make more profits when their revenue is greater than their total costs. In other words, the difference between the entrepreneur's total revenue and total cost (profit) is maximized when revenue is high and costs are low.
Therefore, out of the options given, the entrepreneur is more likely to make more profits when the costs per unit output falls. This is because when costs per unit output fall, the total cost of producing a given quantity of output decreases. Thus, the entrepreneur is able to maintain or lower their selling price while earning a higher profit per unit sold.
The other options listed would not lead to an increase in profits. If expenditure is more than revenue, the entrepreneur is making a loss rather than a profit. If competitors charge lower prices, the entrepreneur may have to lower their own prices, which would decrease their profit margins. If the quantity of output reduces, the entrepreneur's revenue would decrease, and their fixed costs (such as rent or salaries) would be spread across fewer units, increasing their total costs per unit and decreasing their profit margin.