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HW#5 (Monopoly, Monopolistic Competition, Oligopoly) Back to Assignment Attempts: Keep the Highest: /3 2. The components of marginal revenue Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Jake produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Jake faces. As you can see, to sell the additional engine, Jake must lower his price from $100,000 to $50,000 per fire engine. Note that while Jake gains revenue from the additional engine he sells, he also loses revenue from the initial seven 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 seven engines by selling at $50,000 rather than $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. (? 250 225 Revenue Lost 200 E 175 150 Revenue Gained ollars per fire engine) HW#5 (Monopoly, Monopolistic Competition, Oligopoly) (?) 250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 5 10 QUANTITY (Fire engines) Jake increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Jake's Fire Engines were a competitive firm instead and $100,0 price effect rket price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantit output effect al revenue. True False PRICE (Thousands of dollars per fire engine)

HW#5 (Monopoly, Monopolistic Competition, Oligopoly) Back to Assignment Attempts: Keep the Highest: /3 2. The components of marginal revenue Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Jake produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Jake faces. As you can see, to sell the additional engine, Jake must lower his price from $100,000 to $50,000 per fire engine. Note that while Jake gains revenue from the additional engine he sells, he also loses revenue from the initial seven 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 seven engines by selling at $50,000 rather than $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. (? 250 225 Revenue Lost 200 E 175 150 Revenue Gained ollars per fire engine) HW#5 (Monopoly, Monopolistic Competition, Oligopoly) (?) 250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 5 10 QUANTITY (Fire engines) Jake increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Jake's Fire Engines were a competitive firm instead and $100,0 price effect rket price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantit output effect al revenue. True False PRICE (Thousands of dollars per fire engine)

Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Monopolistic Competition
Section: Chapter Questions
Problem 5PA
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HW#5 (Monopoly, Monopolistic Competition, Oligopoly) Back to Assignment Attempts: Keep the Highest: /3 2. The components of marginal revenue Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Jake produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Jake faces. As you can see, to sell the additional engine, Jake must lower his price from $100,000 to $50,000 per fire engine. Note that while Jake gains revenue from the additional engine he sells, he also loses revenue from the initial seven 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 seven engines by selling at $50,000 rather than $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. (? 250 225 Revenue Lost 200 E 175 150 Revenue Gained ollars per fire engine)
Transcribed Image Text:HW#5 (Monopoly, Monopolistic Competition, Oligopoly) Back to Assignment Attempts: Keep the Highest: /3 2. The components of marginal revenue Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Jake produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Jake faces. As you can see, to sell the additional engine, Jake must lower his price from $100,000 to $50,000 per fire engine. Note that while Jake gains revenue from the additional engine he sells, he also loses revenue from the initial seven 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 seven engines by selling at $50,000 rather than $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. (? 250 225 Revenue Lost 200 E 175 150 Revenue Gained ollars per fire engine)
HW#5 (Monopoly, Monopolistic Competition, Oligopoly) (?) 250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 5 10 QUANTITY (Fire engines) Jake increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Jake's Fire Engines were a competitive firm instead and $100,0 price effect rket price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantit output effect al revenue. True False PRICE (Thousands of dollars per fire engine)
Transcribed Image Text:HW#5 (Monopoly, Monopolistic Competition, Oligopoly) (?) 250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 5 10 QUANTITY (Fire engines) Jake increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Jake's Fire Engines were a competitive firm instead and $100,0 price effect rket price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantit output effect al revenue. True False PRICE (Thousands of dollars per fire engine)
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