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.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter11: Monopoly And Antitrust Policy
Section: Chapter Questions
Problem 6SCQ: Urban transit systems, especially those with rail systems, typically experience significant...
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Question
![Chapter 16 Homework
PRICE (Thousands of dollars per fire engine)
220
Femi
200
180
160
140
120
100
80
60
40
20
0
0
True
1
False
2
4 56 7
QUANTITY (Fire engines)
3
8
Demand
9 10
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.
Revenue Lost
Revenue Gained
dominates in this scenario.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4b1bc8af-06cb-4b5f-9c02-4d0e95c9cacc%2Ffed78363-65e6-4bf2-8900-27e76ef8c651%2F2flw9w9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Chapter 16 Homework
PRICE (Thousands of dollars per fire engine)
220
Femi
200
180
160
140
120
100
80
60
40
20
0
0
True
1
False
2
4 56 7
QUANTITY (Fire engines)
3
8
Demand
9 10
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.
Revenue Lost
Revenue Gained
dominates in this scenario.
![Chapter 16 Homework
3. The components of marginal revenue
Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi initially produced eight trucks, but then
decided to increase production to nine trucks. The following graph gives the demand curve faced by Femi's Hook NLadder. As the graph shows, in order
to 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 the
additional 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 rather
than $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 8
220
200
180
160
140
120
100
80
60
40
20
0
0
1
2
4
5
6
7
QUANTITY (Fire engines)
3
Demand
8 9
10
Revenue Lost
Revenue Gained](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4b1bc8af-06cb-4b5f-9c02-4d0e95c9cacc%2Ffed78363-65e6-4bf2-8900-27e76ef8c651%2Fps0tpts_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Chapter 16 Homework
3. The components of marginal revenue
Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi initially produced eight trucks, but then
decided to increase production to nine trucks. The following graph gives the demand curve faced by Femi's Hook NLadder. As the graph shows, in order
to 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 the
additional 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 rather
than $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 8
220
200
180
160
140
120
100
80
60
40
20
0
0
1
2
4
5
6
7
QUANTITY (Fire engines)
3
Demand
8 9
10
Revenue Lost
Revenue Gained
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