Asked by NURUL ASMIRA JAKIMIN on May 23, 2024
Verified
The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that
A) product price increases as output increases.
B) product price decreases as output increases.
C) product price is constant at all levels of output.
D) marginal revenue declines as more output is produced.
Total Revenue Curve
A graph that illustrates how a firm's total revenue changes as the quantity of goods sold changes, holding the price per unit constant.
Linear
Relating to a straight line or a model where relationships between variables or quantities are proportional.
- Study the correlation between marginal revenue and pricing strategies in the realm of a purely competitive firm.
- Explicate the correlation among average revenue, total revenue, and the procedure for setting prices in purely competitive scenarios.
Verified Answer
UA
Usama AshrafMay 26, 2024
Final Answer :
C
Explanation :
In a purely competitive market, the price of the product remains constant regardless of the level of output produced by the firm. This is because individual firms are price takers due to the large number of firms in the market, each producing a small fraction of the total market supply. Therefore, the total revenue curve is linear and upsloping, reflecting a constant price per unit sold.
Learning Objectives
- Study the correlation between marginal revenue and pricing strategies in the realm of a purely competitive firm.
- Explicate the correlation among average revenue, total revenue, and the procedure for setting prices in purely competitive scenarios.