3. The components of marginal revenue
Van's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Van produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Van faces. As you can see, to sell the additional engine, Van must lower his price from $60,000 to $40,000 per fire engine. Note that while Van gains revenue from the additional engine he sells, he also loses revenue from the initial five 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 five engines by selling at $40,000 rather than $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.
Van _______ increase production from 5 to 6 fire engines because the_______ dominates in this scenario.
True or False: If Van's Fire Engines were a competitive firm instead and $60,000 were the market price for an engine, decreasing its price from $60,000 to $40,000 would result in the same change in the production quantity and, thus, total revenue.
True
False
Blank 1: Should not
Blank 2: Price effect
Given statement is FALSE
Van's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania
3. The components of marginal revenue Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Alex produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Alex faces. As you can see, to sell the additional engine, Alex must lower his price from $80,000 to $40,000 per fire engine. Note that while Alex gains revenue from the additional engine he sells,...
3. The components of marginal revenue Dmitri's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Dmitri produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Dmitri faces. As you can see, to sell the additional engine, Dmitri must lower his price from $160,000 to $120,000 per fire engine. Note that while Dmitri gains revenue from the additional engine he...
2. The gains and loss from selling one more unit Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Alex produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Alex faces. As you can see, to sell the additional engine, Alex must lower his price from $105,000 to $90,000 per fire engine. Note that although Alex gains revenue from the...
3. The components of marginal revenue Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Raphael faces. As you can see, to sell the additional engine, Raphael must lower his price from $160,000 to $120,000 per fire engine. Note that although Raphael gains revenue from the additional engine he sells,...
Manuel (should or should not ) increase production from 8 to 9
fire engines, because revenue gained is (less than or greater
than) revenue lost in this scenario.
Please let me know if my graph is correct otherwise draw it out
for me and please check over if I answered all parts correctly
thank you!
Manuel's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Manuel produced eight fire engines, but he has decided...
3. The components of marginal revenue Edison's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Edison produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Edison faces. As you can see, to sell the additional engine, Edison must lower his price from $105,000 to $90,000 per fire engine. Note that while Edison gains revenue from the additional engine he sells,...
2. The demand curve facing a monopoly firm Aa Aa Louie's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Loule produces 360 fire engines, but Louie has decided to increase production from 360 to 480 fire engines. The following graph shows the demand curve he faces. As you can see, to sell the additional engines, Louie must lower his price from $50,000 to $40,000. Note that while Loule gains revenue from one...
The following graph illustrates the demand curve facing a single-price monopolist. Suppose the monopolist initially sells its output at $40 per unit. Then it raises its price to $50 per unit. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from selling fewer units of output. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling each unit of output at a higher price Revenue Lost ) Revenue...
4. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for...
4. Profit maximisation and loss minimisation BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Imagine that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Complete the following table to determine whether Van is correct. Price (Dollars per can) 2.50...