3. The components of marginal revenue Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced seven trucks, but then decided to Increase production to eight trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $100,000 to $50,000 per truck. Notice that Asim gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial seven engines because they are all sold at the lower price. use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 250 221 200 179 150 125 100 75 50 29 1 2 > QUANTITY (Fire engines) Demand B 10 Revenue Lost Revenue Gained increase production from 7 to 8 fire engines because the dominates in this scenario.

3. The components of marginal revenue Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced seven trucks, but then decided to Increase production to eight trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $100,000 to $50,000 per truck. Notice that Asim gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial seven engines because they are all sold at the lower price. use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 250 221 200 179 150 125 100 75 50 29 1 2 > QUANTITY (Fire engines) Demand B 10 Revenue Lost Revenue Gained increase production from 7 to 8 fire engines because the dominates in this scenario.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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