evenue Mo s HookNLadder is the only company selling fire engines in the fictional country of Alexandrina Mo initially produced

Question

evenue Mo s HookNLadder is the only company selling fire engines in the fictional country of Alexandrina Mo initially produced eight trucks but then decided to increase production to nine trucks The following graph gives the demand curve faced by Mo s HookNLadder As the graph shows in order to sell the additional fire truck Mo must lower the price from 80 000 to 60 000 per truck Notice that Mo 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 60 000 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 60 000 110 100 90 22 80 70 PRICE Thousands of dollars per fire engine 60 50 40 30 20 10 O Revenue Lost Demand 2 3 4 5 6 7 8 9 10 QUANTITY Fire engines Revenue Gained Mo increase production from 8 to 9 fire engines because the dominates in this scenario True or False If alternatively Mo s HookNLadder were a competitive firm and 80 000 were the market price for an engine decreasing its price from 80 000 to 60 000 would result in the same change in the production quantity and thus total revenue O True

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