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

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning the price of their product is determined by the market. Therefore, when a perfectly competitive firm increases output, its total revenue increases because the price remains constant (there is no price effect), and more units are sold at this constant price.

When a Perfectly Competitive Firm Increases Output, Total Revenue _______