(Solved): 3. The components of marginal revenue Asim's HookNLadder is the only company selling fire engine ...

3. The components of marginal revenue Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph show in order to sell the additional fire truck, Asim must lower the price from \( \$ 105,000 \) to \( \$ 90,000 \) per truck. Notice that Asim 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 initial 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 selling an additional engine at \( \$ 90,000 \) Asim increase production from 4 to 5 fire engines because the dominates in this scenario. True or False: If alternatively Asim's HookNLadder were a competitive firm and \( \$ 105,000 \) were the market price for an engine, increasing production would not affect the price at which the company is able to sell engines. True False