Question

Why is total revenue curve facing a competitive firm straight line passing through the origin.

Answer 1

A competitive firm’s total revenue (TR) curve is a straight line that passes through the origin since the price remains constant at all output levels. 

• When a company raises its output, its overall revenue grows at the same rate.
• For example, if each unit costs ₹ 5, selling one unit yields ₹ 5, selling two yields ₹ 10, selling three yields ₹ 15, etc.
• So, TR rises in direct proportion to output. 

The curve begins at the origin because zero output equals zero revenue. In perfect competition, the price and marginal income do not change, hence the slope of the TR curve remains constant.