If a perfectly competitive firm produces and sells more output,its _______ will definitely increase.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the price is determined by the market forces and the individual firm cannot influence it. Therefore, the firm's marginal revenue is equal to the price of the good. Selling more output will increase the total revenue for the firm, as it receives the same price for each unit sold. However, the average total cost might or might not increase, as it depends on the shape of the cost curves. The total profit will increase if the increase in revenue is greater than the increase in costs.

If a Perfectly Competitive Firm Produces and Sells More Output,its