Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but then decided to increase production to six 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 $60,000 to $40,000 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 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 $40,000 rather than $60,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 11:20 100 0 Jabari 1 O True 2 O False 1 Demand + 8 QUANTITY (Fire engines) 8 9 Revenue Lost Revenue Gained increase production from 5 to 6 fire engines because the True or False: If alternatively Jabari's HookNLadder were a competitive firm and $60,000 were the market price for an engine, decreasing its price from $60,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue. dominates in this scenario.
Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but then decided to increase production to six 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 $60,000 to $40,000 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 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 $40,000 rather than $60,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 11:20 100 0 Jabari 1 O True 2 O False 1 Demand + 8 QUANTITY (Fire engines) 8 9 Revenue Lost Revenue Gained increase production from 5 to 6 fire engines because the True or False: If alternatively Jabari's HookNLadder were a competitive firm and $60,000 were the market price for an engine, decreasing its price from $60,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue. dominates in this scenario.
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Monopoly
Section: Chapter Questions
Problem 8PA
Related questions
Question
Transcribed Image Text:3. The components of marginal revenue
Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but
then decided to increase production to six 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 $60,000 to $40,000 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 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
$40,000 rather than $60,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from
selling an additional engine at $40,000.
(a 6 ayad sopo spesi
0
Jabari
0
1
O True
2
False
Demand
5
7
QUANTITY (Fire engines)
8
2
10
Revenue Lost
Revenue Gained
increase production from 5 to 6 fire engines because the
True or False: If alternatively Jabari's HookNLadder were a competitive firm and $60,000 were the market price for an engine, decreasing
its price from $60,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue.
dominates in this scenario.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
