Suppose a firm in a competitive market produces and sells 150 units of output and earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units, the average revenue of the 200th unit will be

a less than $12.
b. more than $12.
c. $12.
d. Any of the above may be correct depending on the price elasticity of demand for the product

Any of the above may be correct depending on the price elasticity of demand for the product is the average revenue of the 200th unit. Hence, option D is correct.

What is price elasticity of demand?

Plastic elasticity of demand is the change in the consumption of the commodity in related to the change in the price of that particular commodity. The change in price can cause high change in the supply and demand of the product.

Perfectly inelastic, inelastic, perfectly elastic, elastic, and unitary are the five different types of price elasticity of demand. By dividing the percentage change in quantity required by the percentage change in price, one can determine the price elasticity of demand. It is said that a good is inelastic if a price change has little impact on either supply or demand.

Thus, option D is correct.

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