When a competitive firm doubles the amount of output it sells,its

Question

Quizplus · Accepted Answer

When a competitive firm doubles the amount of output it sells, the price remains the same, which means that the total revenue will double. This is because total revenue equals the price multiplied by the quantity sold. Therefore, the correct answer is A). B) and C) are incorrect because the average revenue (price) and marginal revenue (change in revenue from selling one more unit) will stay the same, respectively. D) is also incorrect because we do not have enough information to determine if profits will increase since we do not know if the cost of production will increase as well.

When a Competitive Firm Doubles the Amount of Output It