Question

Under perfect competition, why is the Total Revenue (TR) curve a straight line from the origin?

Options

• The firm can sell any quantity at the same market price

• The firm is a price maker and can change the price

• Total Cost increases at a constant rate

• Marginal Cost is constant at all levels of output

Answer 1

The firm can sell any quantity at the same market price

Explanation:

The firm is a price taker, so TR increases at a constant rate with output, giving a straight-line TR curve.