Question

lmnop, inc is a firm in a perfectly competitive market that produces cell phone charging cables. every time it sells a cell phone charging cable, its total revenue increases by:_________

Answer 1

A perfectly competitive firm's total revenue increases by the market price of its product.

Step-by-step explanation:

A perfectly competitive firm in a perfectly competitive market, such as lmnop, inc, faces a perfectly elastic demand curve for its product. This means that the firm's demand curve is a horizontal line at the market price level, and its marginal revenue is equal to the market price. Therefore, every time lmnop, inc sells a cell phone charging cable, its total revenue increases by the market price.

Answer 2

In a perfectly competitive market like the one LMNOP, Inc. is in, every time the firm sells a cell phone charging cable, its total revenue increases by the fixed market price of the cable.

Step-by-step explanation:

Every time LMNOP, Inc., a firm in a perfectly competitive market, sells a cell phone charging cable, its total revenue increases by a fixed amount equal to the market price. In a perfectly competitive market, a firm's marginal revenue is the same as the market price because the firm's demand curve is perfectly elastic; this means the firm can sell an additional unit of their product for the same price as the previous units. Consequently, for LMNOP, Inc., the increase in total revenue from selling an additional charging cable reflects the constant market price of that cable.

In a perfect competition scenario, when determining highest profit, a firm compares total revenue and total cost. Profits are maximized when the quantity produced is such that marginal revenue equals marginal cost, and the market price is above the average cost of production.