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Tom Produces Commemorative T-Shirts in a Competitive Market

Question 163

Multiple Choice

Tom produces commemorative t-shirts in a competitive market. If Tom decides to decrease his output, this will


A) increase his revenue, since the output decrease leads to a higher market price.
B) increase his revenue, since Tom's competitors will also decrease their output, so that price rises to offset the drop in Tom's output.
C) decrease his revenue, since his output has decreased and the price remains the same.
D) decrease his revenue, since the price falls as competitors increase their output to make up for his decrease in output.

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