Chapter 16 HomeworkPRICE (Thousands of dollars per fire engine)220Femi2001801601401201008060402000True1False24 56 7QUANTITY (Fire engines)38Demand9 10increase production from 8 to 9 fire engines because theTrue or False: If alternatively Femi'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 the same change in the production quantity and, thus, total revenue.Revenue LostRevenue Gaineddominates in this scenario. Chapter 16 Homework3. The components of marginal revenueFemi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi initially produced eight trucks, but thendecided to increase production to nine trucks. The following graph gives the demand curve faced by Femi's Hook NLadder. As the graph shows, in orderto sell the additional fire truck, Femi must lower the price from $80,000 to $40,000 per truck. Notice that Femi 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)8 8 8 8 8 8 8 8 82202001801601401201008060402000124567QUANTITY (Fire engines)3Demand8 910Revenue LostRevenue Gained

The demand curve represents the quantity demanded by consumers at different price levels. Total…

increase production from 8 to 9 fire engines because the True or False: If alternatively Femi'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 the same change in the production quantity and, thus, total revenue. Femi True False dominates in this scenario.

increase production from 8 to 9 fire engines because the True or False: If alternatively Femi'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 the same change in the production quantity and, thus, total revenue. Femi True False 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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#3 def
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