3. The components of marginal revenueAsim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced seven trucks, but then decidedto increase production to eight trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell theadditional fire truck, Asim must lower the price from $100,000 to $50,000 per truck. Notice that Asim gains revenue from the sale of the additional engine,but at the same time, he loses revenue from the initial seven 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 seven engines by selling at $50,000 ratherthan $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at$50,000.PRICE (Thousands of dollars per fire engine)275250Asim225200175150125100755025001O True2O False743 4 5 6QUANTITY (Fire engines)Demand+++89 10Revenue LostRevenue Gainedincrease production from 7 to 8 fire engines because the?True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, decreasing its price from$100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue.dominates in this scenario.

Monopoly market structure has only a single seller in the market. Under monopoly the seller has the…

Asim True increase production from 7 to 8 fire engines because the True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O False dominates in this scenario.

Asim True increase production from 7 to 8 fire engines because the True or False: If alternatively Asim's HookNLadder were a competitive firm and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O False dominates in this scenario.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 3SCQ: Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation...

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