Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue. If the firm increases its output to 200 units, total revenue will be

Question

BlackTom AI · Accepted Answer

Start by identifying the given data and what it implies about price.
- The firm sells 150 units and earns total revenue (TR) of 1800. Price per unit is TR/quantity = 1800/150 = 12.
- In a competitive market, the firm is typically price taker, so the price remains the same when output changes, meaning total revenue at a different quantity is simply price times new quantity.
Now evaluate each answer option against this price:
- Option: We do not have enough information to answer the question. This is incorrect because we can determine the price from the initial data (TR and quantity) and then apply it to the new quantity.
- Option: $2000. If the price were $10 per unit, TR would be 10 × 200 = 2000, but the price derived from the given data is $12, not $10, so this is inconsistent with the provided information.
- Option: $4200. If the price were $21 per unit, TR would be 21 × 200 = 4200; again, this contradicts the price implied by the initial data, so this option is incorrect.
- Option: $2400. With the confirmed price of $12 per unit, TR at 200 units equals 12 × 200 = 2400, which matches the calculation from the given data.
In summary, once the price is inferred from the initial TR and quantity, the new total revenue is simply price times new quantity, and only $2400 aligns with that calculation.

ECON1-TTh Chapter 15 Assignment

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue. If the firm increases its output to 200 units, total revenue will be

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ECON1-TTh Chapter 15 Assignment

Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue. If the firm increases its output to 200 units, total revenue will be

View Explanation

Log in for full answers

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