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 will:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm is a price taker, meaning it cannot affect the market price. Therefore, the firm's marginal revenue (MR) is equal to the market price. If the firm increases its production from 300 units to 550 units, its MR will remain at $8, but its total revenue will increase from:
MR x Q1 = $8 x 300 = $2,400 
to
MR x Q2 = $8 x 550 = $4,400

If a Firm in a Perfectly Competitive Market Faces a Market