Give my answer expert Femi's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Femi initially produced eight trucks, but thendecided to increase production to nine 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 $80,000 to $40,000 per truck. Notice that Femi gains revenue from the sale of theadditional engine, but at the same time, he loses revenue from the initial eight 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 eight engines by selling at $40,000 ratherthan $80,000. 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)220200180160140120100BO604020126 67QUANTITY (Fire engines)8Demand10Revenue LostRevenue Gained PRICE (Thousands of dollars per fire engine)20018016014012010080229 2604020001Femi should notTrue2O False73 4 5 6QUANTITY (Fire engines)"Demand10Revenue Lostincrease production from 8 to 9 fire engines because the price effectshouldTrueternatively Femi's Hook NLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from$80, should not would result in the same change in the production quantity and, thus, total revenue.Revenue Gaineddominates in this scenario.

Demand shows that there is an inverse relationship between price and quantity demanded. We can…

PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 80 60 40 20 ++ Femi should not True 2 O False 3 45 6 QUANTITY (Fire engines) . Demand 9 10 Revenue Lost increase production from 8 to 9 fire engines because the price effect should True ernatively Femi's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from $80, should not would result in the same change in the production quantity and, thus, total revenue. Revenue Gained dominates in this scenario.

PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 80 60 40 20 ++ Femi should not True 2 O False 3 45 6 QUANTITY (Fire engines) . Demand 9 10 Revenue Lost increase production from 8 to 9 fire engines because the price effect should True ernatively Femi's HookNLadder were a competitive firm and $80,000 were the market price for an engine, decreasing its price from $80, should not would result in the same change in the production quantity and, thus, total revenue. Revenue Gained dominates in this scenario.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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