If a firm faces a horizontal demand curve,marginal revenue
A)is constant regardless of how much output the firm produces
B)decreases as the firm produces more output
C)increases as the firm produces more output
D)decreases if the firm produces less output
E)is less than price at most possible output levels

Question

Quizplus · Accepted Answer

A horizontal demand curve implies that the firm can sell any quantity of output at the same price. Therefore, the additional revenue earned from selling one more unit of output (marginal revenue) will be the same as the price of the product. In other words, marginal revenue will not depend on the quantity of output produced, and it will remain constant.

If a Firm Faces a Horizontal Demand Curve,marginal Revenue