Question

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 set of customers, he loses revenue from the initial customers by selling all engines at the lower price Use the purple rectangle (diamond symbols) to shade the area representing this revenue lost (that is, from selling to the initial customers at $40,000 rather than $50,000). Use the green rectangle (triangle symbols) to shade the area representing revenue gained (that is, from selling to the additional customers at a price of $40,000). PRICE (Thousands of dollars per fire enginel 100 90 80 70 60 50 40 30 20 10 Revenue Lost Revenue Gained 0 120 240 360 480 600 720 840 960 10801200 QUANTITY İFire engines, Leip. Clear All