Question

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 to increase production to nine fire engines. The following graph shows the demand curve Manuel faces. As you can see, to sell the additional engine, Manuel must lower his price from $80,000 to $60,000 per fire engine. Note that although Manuel 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 s60,000 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. 100 90 Demand Revenue Last 80 70 Revenue Gained E0 50 40 30 20 10 0 1 2 3 4 5 6 7 10 QUANTITY (Fire engines) than revenue lost in this scenario increase production from 8 to 9 rire engines, because revenue gained is Manuel should not True or False: I Manuel's Fire Engines were a competitive firm instead and $80,0000 were the market price for an engine, decreasing its price from $80,000 to s60,000 would result in an increase in production quantity and total revenue True O False PRICE (Thausands of dalars per fire engine)

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!

Answer 1

The graph is correct

Blanks-

1) should not

2) less than

The statement is False as competitive firms have no control over the setting of the price