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For a perfectly competitive firm, which of the following is NOT true? A. The total revenue curve begins at the origin and slopes upward as output increases. B. The slope of the total revenue curve is equal to the product price. C. The total revenue curve is horizontal. D. The average revenue curve, the demand and the marginal revenue curves are identical.

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  1. Today, 14:14
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    Answer: "C. The total revenue curve is horizontal." Is NOT True.

    Explanation: In perfect competition, the demand curve is horizontal, since the good offered has infinite substitutes and the producers are accepting price, then the price is a constant. If whatever the quantity, the price is the same, the demand curve has to be horizontal.

    Therefore its total revenue will be obtained as the multiplication of the number of units sold by the price (The price of the good is the slope of the curve), which being the latter constant, the graph of the total income will be linear and will start from the origin, because if you sell zero units your revenue will be zero. And the greater the units sold, the greater the total revenue, therefore the curve is not horizontal.
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