The fact that a perfectly competitive firm's total revenue curve is an upward-sloping straight line implies that
A)The total profit curve is also an upward-sloping straight line.
B)Product price is constant at all levels of output.
C)Product price decreases as output increases,and demand is elastic.
D)Product price increases at all output levels.

Question

Quizplus · Accepted Answer

In perfect competition, a firm is a price taker, meaning it cannot influence the price of the product. Therefore, the product price remains constant at all levels of output. The total revenue curve is a straight line because the increase in revenue from selling one more unit is equal to the product price. As the firm increases output, the total revenue curve increases at the same rate as output, indicating that the price remains constant.

The Fact That a Perfectly Competitive Firm's Total Revenue Curve