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) 275 250 225 200 175 150 125 Demand 100 75 50 25 0 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Fire engines) Revenue Lost Revenue Gained ? Asim should True increase production from 7 to 8 fire engines because the dominates in this scenario. ternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production would should not e price at which the company is able to sell engines. Asim increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If alternatively Asim's HookNLadder were a competitive firm and would not affect the price at which the company is able to sell engines. output effect price effect the market price for an engine, increasing production True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production would not affect the price at which the company is able to sell engines. True False
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) 275 250 225 200 175 150 125 Demand 100 75 50 25 0 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Fire engines) Revenue Lost Revenue Gained ? Asim should True increase production from 7 to 8 fire engines because the dominates in this scenario. ternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production would should not e price at which the company is able to sell engines. Asim increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If alternatively Asim's HookNLadder were a competitive firm and would not affect the price at which the company is able to sell engines. output effect price effect the market price for an engine, increasing production True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production would not affect the price at which the company is able to sell engines. True False
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Price-searcher Markets With Low Entry Barriers
Section: Chapter Questions
Problem 17CQ
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Transcribed Image Text: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)
275
250
225
200
175
150
125
Demand
100
75
50
25
0
0
1
2
3
4
5
6
7
8
9
10
QUANTITY (Fire engines)
Revenue Lost
Revenue Gained
?
Asim
should
True
increase production from 7 to 8 fire engines because the
dominates in this scenario.
ternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production
would should not e price at which the company is able to sell engines.
Transcribed Image Text:Asim
increase production from 7 to 8 fire engines because the
dominates in this scenario.
True or False: If alternatively Asim's HookNLadder were a competitive firm and
would not affect the price at which the company is able to sell engines.
output effect
price effect
the market price for an engine, increasing production
True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, increasing production
would not affect the price at which the company is able to sell engines.
True
False
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