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3. The components of marginal revenue Mo's HookNLadder is the only company selling re engines in the ctional countryr of Alexandrina. Mo initiallyr produced four
3. The components of marginal revenue Mo's HookNLadder is the only company selling re engines in the ctional countryr of Alexandrina. Mo initiallyr produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Mo's HookNLadder. As the graph shows, in order to sell the additional firetruck, Mo must lower the price from $105,000 to $90,000 per truck. Notice that Mo gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial four engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initiai four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from seiling an additional engine at $90,000. 165 150 Revenue Lost 135 120 Demand 105 Revenue Gained 90 PRICE (Thousands of dollars per fire engine) 75 60 45 30 15 0 2 3 4 5 6 7 8 9 10 QUANTITY (Fire engines)Mo 7 increase production from 4 to 5 re engines because the V dominates in this scenario. True or False: If alternatively Mo's HookN Ladder were a competitive rm and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in a decrease in the production quantity, but an increase in total revenue. O True 0 False Mo V increase production from 4 to 5 fire engines because the V dominates in this scenario. Tru $1 I Iternatively Mo's HookNLadder were a competitive rm and $105,000 were the market price for an engine, decreasing its price from should not .000 would result in a decrease in the production quantity, but an increase in total revenue. O True 0 False Mo 7 increase production from 4 to 5 fire engines because the V dominates in this scenario. output effect True or False: If alternatively Mo's HookNLadder were a competitive rm and he market price for an engine, decreasing its price from $105,000 to $90,000 would result in a decrease in the production quantity, t:- total revenue. 0 Tme 0 False
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