Omari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Omari initially produced four trucks, but thendecided to increase production to five trucks. The following graph gives the demand curve faced by Omari's HookNLadder. As the graph shows, inorder to sell the additional fire truck, Omari must lower the price from $105,000 to $90,000 per truck. Notice that Omari gains revenue from the saleof 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 ratherthan $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engineat $90,000.PRICE (Thousands of dollars per fire engine)165150135120105Omari907560453015Revenue LostDemand+Revenue Gained001 2 345 678 910QUANTITY (Fire engines)increase production from 4 to 5 fire engines because the?dominates in this scenario.True or False: If alternatively Omari's HookNLadder were a competitive firm and $105,000 were the market price for an engine, decreasing its pricefrom $105,000 to $90,000 would result in a decrease in the production quantity, but an increase in total revenue.оTrueFalse

In this step, we delve into the intricate dance between price adjustment and demand, a fundamental…

Omari increase production from 4 to 5 fire engines because the dominates in this scenario. True or False: If alternatively Omari'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 a decrease in the production quantity, but an increase in total revenue. True False

Omari increase production from 4 to 5 fire engines because the dominates in this scenario. True or False: If alternatively Omari'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 a decrease in the production quantity, but an increase in total revenue. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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