Asked by Taylor Alexander on Jul 30, 2024
Verified
Which of the following statements regarding a competitive firm is correct?
A) Because each firm faces a downward sloping demand, if a firm increases its level of output, the firm will have to charge a lower price to sell the additional output.
B) If a firm raises its price, the firm may be able to increase its total revenue even though it will sell fewer units.
C) By lowering its price below the market price, the firm will benefit from selling more units at the lower price than it could have sold by charging the market price.
D) For all firms, average revenue equals the price of the good.
Competitive Firm
A business entity in a market where numerous sellers compete to sell their goods or services, implying no single seller controls the market prices.
Downward Sloping Demand
The economic principle that, all else being equal, demand for a good or service decreases as its price increases.
Total Revenue
The overall income generated by a business from the sale of goods or services before any costs or expenses are subtracted.
- Comprehending the effect of market competition on the pricing policies and output determinations of a firm.
Verified Answer
Learning Objectives
- Comprehending the effect of market competition on the pricing policies and output determinations of a firm.
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