True or False: If Kevin's Fire Engines were a competitive firm instead and $160,000 were the market price for an engine, decreasing its price from $160,000 to $120,000 would result in the same change in production quantity and, thus, total revenue. True False

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johnnymonreal5169 johnnymonreal5169

24-11-2020
Business

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True or False: If Kevin's Fire Engines were a competitive firm instead and $160,000 were the market price for an engine, decreasing its price from $160,000 to $120,000 would result in the same change in production quantity and, thus, total revenue. True False

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andromache andromache · Answer 1 · 2020-11-26T02:11:38+01:00

Answer:

False

Explanation:

Kevin should not rise the level of production from 5 to 6 as the impact of the price dominates this situation

Also the market is not depend on the Kevin fire engines because of the competitive market

Plus the supply and demand relation is inverse and not depend on the change in price level in a competitive market

If the price is decreased from $160,000 to $120,000 so the quantity of the production would not be impacted

In addition to this, the total revenue could be impacted when there is a reduction in the price that produced more sale due to this there is a slightly change in upward and downward

Also the change would never be in the similar production as compare to the change in price

Therefore the given statement is false

Tundexi Tundexi · Answer 2 · 2021-11-30T17:08:05+01:00

False, the decrease in its product price from $160,000 to $120,000 would NOT result in the change in production quantity as the Total revenue

Looking at the attached graph, we will observes that the Demand slope moves backward as the price of the Product increases.

The Engine product is definitely not as exception to the law of demand that asserts that "the Higher the price, the lower the quantity demanded from customers and Vice versa"

So, if Kevin's Fire Engines firm market price ($160,000) for an engine decreasing to $120,000 in the competitive market, then, the demand from customers will increase.

Whereas, the reduction of the only affect the market price and increase total revenue of the firm, it does not increase the production quantity asked in the question.

Therefore, the decrease in its product price from $160,000 to $120,000 would NOT result in the change in production quantity as the Total revenue

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