ECO 157 Assignment 10 (Ch 15)PRICE (Thousands of dollars per fire engine)2 2 2 2 2 2 2 2 2 2 222020018016014012010000200FemiATrue2FalseDemand3 4$7QUANTITY (Fire engines)8910dominates in this scenario.True or False: If alternatively Femi's HookNLadder were a competitive firm and $160,000 were the market price for an engine, decreasing its pricefrom $160,000 to $120,000 would result in a decrease in the production quantity, but an increase in total revenue.Revenue LostRevenue Gainedincrease production from 5 to 6 fire engines because the Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi Initially produced five trucks, but thendecided to increase production to six trucks. The following graph gives the demand curve faced by Femi's HookNLadder. As the graph shows, in orderto sell the additional fire truck; Femi must lower the price from $160,000 to $120,000 per truck. Notice that Femi gains revenue from the sale of theadditional engine, but at the same time, he loses revenue from the initial five 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 five engines by selling at $120,000 ratherthan $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engineat $120,000.PRICE (Thousands of dollars per fire engine)8 8 2 2 2 2 8 2 2 2 202202001801601401201006040023DemandQUANTITY (Fire engines).10Revenue LostRevenue Gained?

There is a change in the quantity of goods produced by the firm. At first 5 trucks were…

ECO 157 Assignment 10 (Ch 15) PRICE (Thousands of dollars per fire engine) 2 2 2 2 2 2 2 2 2 2 2 220 200 180 160 140 120 100 0 0 1 2 Demand 4 7 QUANTITY (Fire engines) 3 8 9 10 Revenue Lost Revenue Gained

ECO 157 Assignment 10 (Ch 15) PRICE (Thousands of dollars per fire engine) 2 2 2 2 2 2 2 2 2 2 2 220 200 180 160 140 120 100 0 0 1 2 Demand 4 7 QUANTITY (Fire engines) 3 8 9 10 Revenue Lost Revenue Gained

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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