The correct answer is Option 3: b is true, a is not
- a) Total Revenue (TR) increases at increasing rate then increases at decreasing rate then falls.
- This is false. In perfect competition, the price is constant. Therefore, total revenue (TR) increases at a constant rate as output increases. It is a straight, upward sloping line.
- b) Price = Marginal Revenue.
- This is true. In perfect competition, since the price is constant, each additional unit sold generates revenue equal to the market price. Therefore, Marginal Revenue (MR) is equal to the Price (P).
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