What is the supply curve of Pat .

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Chapter 12, Problem 4SPA

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What is the supply curve of Pat .

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The components of marginal revenue Andrew's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Andrew produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Andrew faces. As you can see, to sell the additional engine, Andrew must lower his price from $80,000 to $60,000 per fire engine. Note that although Andrew gains revenue from the additional engine he sells, he also loses revenue from the initial eight 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 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. (GRAPH 1) Andrew _____ increase production from 8 to 9 fire engines, because revenue…