Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 1 of 29
When price is constant, total revenue ______ when the firm increases its output.
B. increases at a decreasing rate
C. increases at a constant rate
A. rises and then falls
B. increases at a decreasing rate
C. increases at a constant rate
User Contributed Comments 7
| User | Comment |
|---|---|
| danlan | Total revenue=Price*quantity |
| chamad | A is false because the firm may increase quantity |
| Thescholar | The trick here was to notice that the question refers to total revenue and not normal profit |
| thekobe | yes, revenue is related only to output, it does not includes costs, thats the trick |
| choas69 | if you make a mistake here you're learning, keep going. |
| MathLoser | TR = P x Q Example: P =$5 . Q = 10. 5 x 10 = 50. 5 x 11 = 55 (+10%) 5 x 12 = 60 (+9%) 5 x 13 = 65 (+8.3%) 5 x 14 = 70 (+7.69%) I'm lost with this question. |
| 10425406 | the rate is constant because the marginal increase in TR is 5 for every single increase in output/quantity |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.