Question

True or False: If Van's Fire Engines were a competitive firm instead and $105,000 were the market price for an engine, decreasing its price from $105,000 to $90,000 would result in the same change in the production quantity and, thus, total revenue.

Answer 1

Answer:

False

Explanation:

As for the given instance, the market is not solely dependent on Van's Fire Engines, as it is a competitive market.

The supply and demand are inversely proportional and does not depend on change of price in a competitive market.

Accordingly even after decline in the price from $105,000 to $90,000, the production quantity will not be affected similarly with the same proportion.

Further, Total revenue might be affected as with decrease in price might light to more sale, and there might be slight change both upward or downward in such sales revenue.

But since the change will never be in same proportion to change in price.

Thus, the statement above is false.

Answer 2

Answer:

By multiplying the price by the quantity produced (QP), the total revenue (TR) is computed. The given statement is TRUE due to the following reason.

Explanation:

In a competitive market, in contrast to a monopolistic market, individual firms are too small to affect the price through changes in output.

Therefore, if Van's fire engines were a competitive firm, an expansion of output would leave the market price of the fire engines unchanged and there is a result of a statement saying the decrease in the prices of fire engines will lead to the same change or unchanged in the total revenue and production quantity.

Thus, the statement above is true.

For more information, refer to the link:

https://brainly.com/question/15563088?referrer=searchResults