If a competitive firm doubles its output its total revenue ?
Correct answer: A. doubles.
- A. doubles.
- B. more than double
- C. less than doubles.
- D. cannot be determined because the price of the good may rise or fall
Explanation
A competitive firm is a price taker, so doubling output leaves the market price unchanged and doubles total revenue, since total revenue equals price multiplied by quantity.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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