Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania....

Jake's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Jake produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Jake faces. As you can see, to sell the additional engine, Jake must lower his price from $80,000 to $40,000 per fire engine. Note that while Jake 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 $40,000 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 $40,000.

Revenue LostRevenue Gained012345678910200180160140120100806040200PRICE (Thousands of dollars per fire engine)QUANTITY (Fire engines)Demand

Jake increase production from 8 to 9 fire engines because the dominates in this scenario.

True or False: If Jake's Fire Engines were a competitive firm instead and $80,000 were the market price for an engine, decreasing its price from $80,000 to $40,000 would result in a decrease in the production quantity, but an increase in total revenue.

True

False

Expert Solution

Jake's should not increase his production 8 to 9 fir engines because price effect dominatesin this scenario.

False

Rahul Sunny answered 2 years ago

The City Fire Department currently owns 7 fire engines and wants to purchase an additional fire...

The City Fire Department currently owns 7 fire engines and wants to purchase an additional fire engine. In order to evaluate this request, the City Council gathers data on vehicles for Fire Departments in cities that are similar in key attributes (population size, land area, tax bases, etc.) These data are presented below. Should the City Council approve the Department’s request to purchase an additional fire engine? (Use any method of analysis that you find helpful and explain your answer...

1. Suppose that New York fire department receives an average of 12 requests for fire engines...

1. Suppose that New York fire department receives an average of 12 requests for fire engines each hour, and that these requests occur according to a Poisson process. Each request causes a fire engine to be unavailable for an average of 12 minutes. To have at least a 90% chance of being able to respond to a request, how many fire engines should the fire department have? 2. Two one-barber shop sit side by side in New York. Each shop...

3. Consider two fictional economies, one called the domestic country and the other the foreign country....

3. Consider two fictional economies, one called the domestic country and the other the foreign country. Given the transactions listed in (a) through (g), construct the balance of payments for each country. If necessary, include a statistical discrepancy. a. The domestic country purchased $120 in oil from the foreign country. b. Foreign tourists spent $35 on domestic ski slopes. c. Foreign consumers purchased $50 of wine from our domestic wineries. d. Domestic investors were paid $25 in dividends from holdings...

Xteel is the sole steel seller in both Canada and USA. The steel is produced in...

Xteel is the sole steel seller in both Canada and USA. The steel is produced in Canada. The marketing department of Company Xsteel has collected the following information. Production cost: Total cost TC = 2000 + 2Q Marginal cost MC = 2 Canada: Market demand Q =180 – 2P Marginal revenue MR = 90 – Q USA: Market demand Q =180 – 10P Marginal revenue MR = 18 – Q/5, where P is price...

the number of fire engines available to extinguish fires in a small town is two. When...

the number of fire engines available to extinguish fires in a small town is two. When a fire occurs it occupies one fire engine for a full day. If the occurence of fires is Poisson distributed with a mean of 0.7 per day, what is the probability that a fire will occur for which no engine is available?

On a spacecraft two engines fire for a time of 591 s. One gives the craft...

On a spacecraft two engines fire for a time of 591 s. One gives the craft an acceleration in the x direction of ax = 5.17 m/s2, while the other produces an acceleration in the y direction of ay = 7.30 m/s2. At the end of the firing period, the craft has velocity components of vx = 3728 m/s and vy = 4812 m/s. Calculate the magnitude of the initial velocity.

5. Distribution of benefits and costs The Parliament, the legislature of the fictional country of Verben,...

5. Distribution of benefits and costs The Parliament, the legislature of the fictional country of Verben, is considering legislation that will generate benefits of $20 million and costs of $26 million. For perspective, Verben's population is 40 million. Passing the legislation is (effecient,ineffecient) , and if everyone in Verben shared equally in both its benefits and its costs, the Parliament will vote (against, for) the legislation. If the benefits of the legislation are concentrated among a few people instead of...

Assume that the labour demand equation for a fictional country is Ld= 30 – w, where...

Assume that the labour demand equation for a fictional country is Ld= 30 – w, where w is the wage per hour worked. Also, assume that the labour supply equation for that country is Ls= 0.5(w). Instructions: Round your answers to the nearest whole number. a. The equilibrium wage is $__ , and the equilibrium quantity of labour employed is __ workers. b. At the equilibrium wage, ___ people are unemployed. c. If the supply of workers increased, the number...

The fictional country of Sendaria finds itself in the following situation: the government has a deficit...

The fictional country of Sendaria finds itself in the following situation: the government has a deficit of 2% GDP, private savings is 17% of GDP, and physical investments are 15% of GDP. a)What is the trade balance? b) If the government budget is set at zero, how will this affect the trade balance? Question 1 options: a) Trade balance = 4%, b) Trade balance will DECREASE to 0% a) Trade balance = 0%, b) Trade balance will INCREASE to 2%...

The movie Black Panther has a fictional country known as Wakanda. It is landlocked, rich in...

The movie Black Panther has a fictional country known as Wakanda. It is landlocked, rich in a natural resources and there is no clear evidence that it trades with the rest of the world. Explain the economic and political challenges a developing country like this in the real world may face. PLEASE BE THOROUGH IN YOUR EXPLANATION AND ONLY ANSWER IF YOU'VE SEEN THE MOVIE

Question