If a firm in a perfectly competitive market faces a market price of $8,and it decides to increase its production from 300 units to 550 units,the firm's total revenue:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm is a price taker and cannot influence the market price. Hence, the firm will continue to sell each additional unit at the market price of $8.

Initially, the firm produced 300 units, and its total revenue was:
Total Revenue = Price x Quantity = $8 x 300 = $2,400

If the firm increases its production to 550 units, its total revenue will be:
Total Revenue = Price x Quantity = $8 x 550 = $4,400

Therefore, increasing its production from 300 units to 550 units will lead to an increase in the firm's total revenue from $2,400 to $4,400. Option A is correct.

If a Firm in a Perfectly Competitive Market Faces a Market