Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced eight trucks, but thendecided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in orderto sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 per truck. Notice that Asim gains revenue from the sale of theadditional engine, but at the same time, he loses revenue from the initial eight 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 eight engines by selling at $40,000 ratherthan $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at$40,000.PRICE (Thousands of dollars per fire engine)220Asim20018016014012010080604020001True2False4 5 6 7QUANTITY (Fire engines)38Demand910Revenue LostRevenue Gainedincrease production from 8 to fire engines because theTrue or False: If alternatively Asim's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from$80,000 to $40,000 would result in a decrease in the production quantity, but an increase in total revenue.dominates in this scenario.

Marginal Revenue is the additional revenue that the firm earns from sale of one additional unit of…

decided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadde to sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 per truck. Notice that Asim gains re additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engin than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from $40,000. gine) 220 200 180 Revenue Lost ?

decided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadde to sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 per truck. Notice that Asim gains re additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engin than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from $40,000. gine) 220 200 180 Revenue Lost ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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