If a firm's total revenue function is a straight line that begins at the origin, then
A) marginal revenue is zero.
B) average revenue is zero.
C) marginal revenue is equal to average revenue.
D) All of the above are true.

Question

Quizplus · Accepted Answer

If a firm's total revenue function is a straight line that begins at the origin, it implies a constant rate of change in revenue with respect to quantity, meaning marginal revenue (the change in total revenue from selling one more unit) is constant. Since the line begins at the origin, average revenue (total revenue divided by quantity) at any point is equal to the slope of the line, which is also the marginal revenue. Therefore, marginal revenue is equal to average revenue.

If a Firm's Total Revenue Function Is a Straight Line