If Bradley’s Butcher Shop sells its product in a competitive market, then the pr
ID: 1164411 • Letter: I
Question
If Bradley’s Butcher Shop sells its product in a competitive market, then
the price of that product depends on the quantity of the product that Bradley’s Butcher Shop produces and sells because the firm’s demand curve is downward sloping.
Bradley’s Butcher Shop's total cost must be a constant multiple of its quantity of output.
Bradley’s Butcher Shop's total revenue must be proportional to its quantity of output.
Bradley’s Butcher Shop's total revenue must be equal to its average revenue.
a.the price of that product depends on the quantity of the product that Bradley’s Butcher Shop produces and sells because the firm’s demand curve is downward sloping.
b.Bradley’s Butcher Shop's total cost must be a constant multiple of its quantity of output.
c.Bradley’s Butcher Shop's total revenue must be proportional to its quantity of output.
d.Bradley’s Butcher Shop's total revenue must be equal to its average revenue.
Explanation / Answer
"C"
Its total revenue will be proportional to its quantity of output. The higher the output the higher the revenue will be and lower the output, the lower the revenue will be. A competitive firms demand curve is perfectly elastic at the price and its total revenue and average revenue are not the same.