When a perfectly competitive firm increases output,total revenue:
A) increases, because there is no price effect.
B) decreases, because there is no price effect.
C) increases, because there is no quantity effect.
D) decreases, because there is no quantity effect.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price-taker and has no influence on the market price. As the firm increases output, it will sell more units at the same market price, leading to an increase in total revenue. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect since they imply that there is no price effect, which is not the case in a perfectly competitive market.

When a Perfectly Competitive Firm Increases Output,total Revenue