Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced six trucks, but then decided to increase production to seven 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 $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 six 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 six engines by selling at $50,000 rather than $100,000. The 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) ERRES 8*8 *. 275 250 200 175 150 125 100 75 50 25 Demand 2 3 45 67 QUANTITY (Fire engines) Revenue Lost Revenue Gained

Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced six trucks, but then decided to increase production to seven 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 $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 six 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 six engines by selling at $50,000 rather than $100,000. The 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) ERRES 88 . 275 250 200 175 150 125 100 75 50 25 Demand 2 3 45 67 QUANTITY (Fire engines) Revenue Lost Revenue Gained

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

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