Karim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Karim initially produced five trucks, but thendecided to increase production to six trucks. The following graph gives the demand curve faced by Karim's HookNLadder. As the graph shows, in orderto sell the additional fire truck, Karim must lower the price from $60,000 to $40,000 per truck. Notice that Karim 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 $40,000 ratherthan $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)A 82 8288 289 RO220200100100140120100Demand3 AA AΔΔ05QUANTITY (Fire engines)Revenue LostRevenue Gained Karim should not increase production from 5 to 6 fire engines because the price effectTrue or False: If alternatively Karim's Hook NLadder were a competitive firm and $60,000 were the market price for an engine, decreasing its pricefrom $60,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue.O TrueFalsedominates in this scenario.

Demand curve slopes downward as it shows an inverse relationship between price and quantity…

's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina, Karim initially produced five trucks, but then ed to increase production to six trucks. The following graph gives the demand curve faced by Karim's HookNLadder. As the graph shows, in order the additional fire truck, Karim must lower the price from $60,000 to $40,000 per truck. Notice that Karim gains revenue from the sale of the ional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $40,000 rather $60,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at 000. A28288 289 R 200 100 PRICE ( 100 140 120 100 Demand A A ΔΔ .. QUANTITY (Fire engines) N Revenue Lost Revenue Gained C

's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina, Karim initially produced five trucks, but then ed to increase production to six trucks. The following graph gives the demand curve faced by Karim's HookNLadder. As the graph shows, in order the additional fire truck, Karim must lower the price from $60,000 to $40,000 per truck. Notice that Karim gains revenue from the sale of the ional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $40,000 rather $60,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at 000. A28288 289 R 200 100 PRICE ( 100 140 120 100 Demand A A ΔΔ .. QUANTITY (Fire engines) N Revenue Lost Revenue Gained C

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter23: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 17CQ

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Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 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 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 rather than $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) 220 Asim 200 180 160 140 120 100 80 60 40 20 0 0 1 True 2 False 4 5…
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 $160,000 to $120,000 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 $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 0 Jabari 0 + 1 True…
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 $160,000 to $120,000 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 $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 20 Jabari 0 0 1 2 3…
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Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but then decided to increase production to five 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 $105,000 to $90,000 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 four 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 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
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Tim True increase production from 4 to 5 fire engines because the True or False: If Tim's Fire Engines were a competitive firm instead and $105,000 were the market price for an engine, increasing its production would not affect the price at which he can sell engines. False dominates in this scenario.
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Carlos's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Carlos produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Carlos faces. As you can see, to sell the additional engine, Carlos must lower his price from $105,000 to $90,000 per fire engine. Note that while Carlos gains revenue from the additional engine he sells, he also loses revenue from the initial four engines because he sells 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. PRICE (Thousands of dollars per fire engine) 150 135 - 120 106 60 45 15 0 + Carlos 0 1 True + 2 False Demand + 6 3 4 5 7 QUANTITY (Fire…