If the total revenue curve of a firm is an upward sloping straight line, then which of the following is true for this firm?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Marginal revenue is always equal to average revenue.
If the Total Revenue (TR) curve is an upward-sloping straight line, it means revenue increases at a constant rate as output increases. The slope of the TR curve represents Marginal Revenue (MR), and since the slope is constant, MR is constant for every level of output.
In a perfectly competitive market, the firm sells each unit at the same price — therefore, MR=AR=Price.
Thus, when the total revenue curve is a straight upward-sloping line, Marginal Revenue is always equal to Average Revenue.