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The theory of the firm under perfect competition — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsThe theory of the firm under perfect competition1 Mark
Question
Giving reasons, state whether the following statement are true or false.
When marginal revenue is positive and constant, both average and total revenue will increase at constant rate.
✓

Answer

False.
Explanation:
It is so because when marginal revenue is positive and constant, total revenue increases at constant rate and average revenue is equal to marginal revenue. It can be explain with the help of the following table.
$\text{Output}$ $\text{Marginal Revenue}$ $\text{Total Revenue}=\sum\text{MR}$ $\text{Average Revenue}=\frac{\text{TR}}{\text{Output}}$
1 10 10 10
2 10 20 10
3 10 30 10
4 10 40 10
5 10 50 10

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