Final answer:
Net income is greater when total revenue exceeds total costs, which can be achieved by selling more units or selling at a higher price without a proportionate increase in costs. The highest profit point is where the gap between the revenue and cost curves is largest. Efficient production and cost control are key to sustaining higher net income across varying sales levels.
Step-by-step explanation:
To determine the conditions for net income to be greater at any level of units sold, one must understand that net income will be greater when total revenue is greater than total cost. In a perfectly competitive firm, net income increases as the quantity of units sold increases or if the price of the product rises, assuming that the increase in sales or price does not lead to a proportionately larger increase in costs. For example, a small farmer selling frozen raspberries for $4 per pack increases total revenue proportionally with the number of packs sold. If the market price rises to $8 per pack, total revenue doubles for the same number of units sold, enhancing net income assuming costs do not double. The highest profit is achieved at the point where the gap between total revenue and total cost is the greatest. Graphically, this would be where the revenue curve is farthest from the cost curve before costs escalate to diminish profit.
Competitive pricing, efficient production, and cost control are also essential for maintaining a higher net income across different sales levels. It is worth mentioning that employees and consumers also contribute indirectly to sustaining net income, as efficient employees keep costs down while satisfied consumers can sustain demand through repeat purchases.