Exhibit 7-1 Quantity and total revenue data for a firm

-Exhibit 7-1 indicates that this firm is operating in which type of market structure?

Question

Exhibit 7-1 Quantity and total revenue data for a firm
 
-Exhibit 7-1 indicates that this firm is operating in which type of market structure?

Quizplus · Accepted Answer

The given data shows a linear relationship between the quantity sold and total revenue earned, which is a characteristic of firms operating in a perfectly competitive market structure. In perfect competition, firms are price-takers and have no control over the market price. Therefore, they can only adjust their production levels to maximize total revenue. Option A is incorrect because in a price-maker market structure, the firm has the ability to control the market price. Option B is incorrect as profitability cannot be determined from the given data. Option D is also incorrect as nonhomogeneous market structures do not exist.

Exhibit 7-1 Quantity and Total Revenue Data for a Firm