Jabari True increase production from 8 to 9 fire engines because the True or False: If alternatively Jabari's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from $80,000 to $60,000 would result in a decrease in the production quantity, but an increase in total revenue. False dominates in this scenario.
Jabari True increase production from 8 to 9 fire engines because the True or False: If alternatively Jabari's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from $80,000 to $60,000 would result in a decrease in the production quantity, but an increase in total revenue. False dominates in this scenario.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Jabari
True
increase production from 8 to 9 fire engines because the
True or False: If alternatively Jabari's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price
from $80,000 to $60,000 would result in a decrease in the production quantity, but an increase in total revenue.
False
dominates in this scenario.
Transcribed Image Text:ols
Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced eight trucks, but then
decided to increase production to nine 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 $80,000 to $60,000 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 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 $60,000 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
$60,000.
PRICE (Thousands of dollars per fire engine)
110
100
90
80
70
60
50
40
30
20
10
0
0
1
2
NOV
9
3
3
4
5
6
7
Demand
89
átv
10
Revenue Lost
Revenue Gained
all
?
A
O
zoom
w
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