Jabari True Increase production from 4 to 5 fire engines because the True or False: If alternatively Jabar's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue. False dominates in this scenario.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but then
decided to increase production to five trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order
to sell the additional fire truck, Jabari must lower the price from $105,000 to $90,000 per truck. Notice that Jabari gains revenue from the sale of the
additional engine, but at the same time, he loses revenue from the initial four 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 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.
PRICE (Thousands of dollars per fire engine)
Jabari
165
150
135
120
105
90
75
60
45
30
15
D
0
True
1
False
2
Demand
+
7
QUANTITY (Fire engines)
8
9
10
Revenue Lost
Revenue Gained
Increase production from 4 to 5 fire engines because the
?
True or False: If alternatively Jabari's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its price
from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue.
dominates in this scenario.
Transcribed Image Text:Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $105,000 to $90,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial four 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 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. PRICE (Thousands of dollars per fire engine) Jabari 165 150 135 120 105 90 75 60 45 30 15 D 0 True 1 False 2 Demand + 7 QUANTITY (Fire engines) 8 9 10 Revenue Lost Revenue Gained Increase production from 4 to 5 fire engines because the ? True or False: If alternatively Jabari's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue. dominates in this scenario.
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