Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced four fire engines, but he is considering increasing production to five fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $105,000 to $90,000 per fire engine. Note that although Sean would gain revenue from the additional engine he sells, he would also lose revenue from the initial four engines because he would have to sell them all 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. 150 135 Revenue Lost 120 Demand 2 105 90 Revenue Gained 75 60 45 30 15 8 QUANTITY (Fire engines) 1 2 6 10 Sean increase production from 4 to 5 fire engines, because the dominates in this scenario. True or False: If Sean's Fire Engines were a competitive firm instead 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 production quantity and, thus, total revenue. O True O False PRICE (Thousands of dollars per fire engine)
Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced four fire engines, but he is considering increasing production to five fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $105,000 to $90,000 per fire engine. Note that although Sean would gain revenue from the additional engine he sells, he would also lose revenue from the initial four engines because he would have to sell them all 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. 150 135 Revenue Lost 120 Demand 2 105 90 Revenue Gained 75 60 45 30 15 8 QUANTITY (Fire engines) 1 2 6 10 Sean increase production from 4 to 5 fire engines, because the dominates in this scenario. True or False: If Sean's Fire Engines were a competitive firm instead 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 production quantity and, thus, total revenue. O True O False PRICE (Thousands of dollars per fire engine)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
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please do the graphs and the questions below
the choices for the following are
Sean 1. (should, should not) increase production from 4 to 5 fire engines, because the 2.( output effect,
thankyou!!!!
Transcribed Image Text:Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced four fire engines, but he is considering
increasing production to five fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean
must lower his price from $105,000 to $90,000 per fire engine. Note that although Sean would gain revenue from the additional engine he sells, he
would also lose revenue from the initial four engines because he would have to sell them all 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.
150
135
Revenue Lost
120
Demand
105
90
Revenue Gained
75
60
45
30
15
3
5
8
10
QUANTITY (Fire engines)
Sean
increase production from 4 to 5 fire engines, because the
dominates in this scenario.
True or False: If Sean's Fire Engines were a competitive firm instead 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 production quantity and, thus, total revenue.
O True
O False
PRICE (Thousands of dollars per fire engine)
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