If Bradley's Butcher Shop sells its product in a competitive market, then
A)the price of that product depends on the quantity of the product that Bradley's Butcher Shop produces and sells because the firm's demand curve is downward sloping.
B)Bradley's Butcher Shop's total cost must be a constant multiple of its quantity of output.
C)Bradley's Butcher Shop's total revenue must be proportional to its quantity of output.
D)Bradley's Butcher Shop's total revenue must be equal to its average revenue.

Question

Quizplus · Accepted Answer

In a competitive market, the price of the product is determined by the market forces of supply and demand. As a result, Bradley's Butcher Shop cannot control the price of its product and must accept the market price. Therefore, the total revenue earned by the firm is directly proportional to the quantity of output sold, making option C the correct choice. Option A is incorrect because the firm's demand curve is not downward sloping in a competitive market. Option B is incorrect because there is no reason why Bradley's Butcher Shop's total cost must be a constant multiple of its quantity of output. Option D is incorrect because total revenue is not always equal to average revenue, as average revenue is calculated by dividing total revenue by the quantity of output sold.

If Bradley's Butcher Shop Sells Its Product in a Competitive