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For a firm operating in a perfectly competitive market, the slope of the TR curve is
  • a)
    increasing
  • b)
    decreasing
  • c)
    constant
  • d)
    zero
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
For a firm operating in a perfectly competitive market, the slope of t...
For a firm operating in a perfectly competitive market, the slope of the TR curve is equal to the price and is constant.
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For a firm operating in a perfectly competitive market, the slope of t...
The slope of the total revenue (TR) curve for a firm operating in a perfectly competitive market is constant. This is because in a perfectly competitive market, a firm is a price taker, meaning it has no control over the price of its product. The price is determined by the market forces of supply and demand.

Explanation:
1. Perfectly competitive market: In a perfectly competitive market, there are many buyers and sellers, and all firms produce identical products. Firms in this market structure have no market power and are price takers.
2. Price taker: A firm in a perfectly competitive market has to accept the market price for its product. It cannot influence or change the price. The firm can only determine the quantity of output it wants to produce.
3. Total revenue (TR): Total revenue is the total amount of money a firm earns from selling its products. It is calculated by multiplying the price per unit by the quantity sold.
4. TR curve: The TR curve shows the relationship between the quantity of output sold and the total revenue earned by the firm.
5. Constant slope: Since the firm is a price taker and has no control over the price, the price per unit of output remains constant regardless of the quantity sold. Therefore, the slope of the TR curve is constant.
6. Constant price: In a perfectly competitive market, the price is constant because all firms sell their products at the same price determined by the market. Any individual firm's increase or decrease in quantity sold does not affect the market price.
7. Linear TR curve: The TR curve for a perfectly competitive firm is a straight line with a constant slope. As the quantity sold increases, the total revenue also increases at a constant rate.
8. Marginal revenue: The slope of the TR curve also represents the marginal revenue (MR) for a perfectly competitive firm. MR is the change in total revenue resulting from a one-unit change in quantity sold. Since the slope is constant, the MR is also constant.

In summary, the slope of the TR curve for a firm operating in a perfectly competitive market is constant because the firm is a price taker and has no control over the price. The constant price leads to a constant slope, indicating that the total revenue increases at a constant rate as the quantity sold increases.
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For a firm operating in a perfectly competitive market, the slope of the TR curve isa)increasingb)decreasingc)constantd)zeroCorrect answer is option 'C'. Can you explain this answer?
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For a firm operating in a perfectly competitive market, the slope of the TR curve isa)increasingb)decreasingc)constantd)zeroCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about For a firm operating in a perfectly competitive market, the slope of the TR curve isa)increasingb)decreasingc)constantd)zeroCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for For a firm operating in a perfectly competitive market, the slope of the TR curve isa)increasingb)decreasingc)constantd)zeroCorrect answer is option 'C'. Can you explain this answer?.
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