Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Alex produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Alex faces. As you can see, to sell the additional engine, Alex must lower his price from $75,000 to $50,000 p fire engine. Note that while Alex gains revenue from the additional engine he sells, he a loses revenue from the initial eight engines because he sells them all at the lower price Use the purple rectangle (diamond symbols) to shade the area representing the revenu lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use 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) 250 200 175 150 125 100 25 Alex 1 5 7 QUANTITY (Fire engines) 3 Demand Revenue Lost Revenue Gained increase production from 8 to 9 fire engines because the dominates in this scenario. True or False: If Alex's Fire Engines were a competitive firm instead and $75,000 were from $75.000 to £50.000 would result

Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Alex produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Alex faces. As you can see, to sell the additional engine, Alex must lower his price from $75,000 to $50,000 p fire engine. Note that while Alex gains revenue from the additional engine he sells, he a loses revenue from the initial eight engines because he sells them all at the lower price Use the purple rectangle (diamond symbols) to shade the area representing the revenu lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use 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) 250 200 175 150 125 100 25 Alex 1 5 7 QUANTITY (Fire engines) 3 Demand Revenue Lost Revenue Gained increase production from 8 to 9 fire engines because the dominates in this scenario. True or False: If Alex's Fire Engines were a competitive firm instead and $75,000 were from $75.000 to £50.000 would result

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Tim True increase production from 4 to 5 fire engines because the True or False: If Tim's Fire Engines were a competitive firm instead and $105,000 were the market price for an engine, increasing its production would not affect the price at which he can sell engines. False dominates in this scenario.
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3. The effects of price changes on total revenue Edison's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Edison produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Edison faces. As you can see, to sell the additional engine, Edison must lower his price from $105,000 to $90,000 per fire engine. Note that while Edison gains revenue from the additional engine he sells, he also loses revenue from the initial four engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. (Note: Area is shown in thousands.) ICE (Thousands of dollars per fire engine). 150 135…
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