Question

True or False: If Lorenzo's Fire Engines were a competitive firm instead and $125,000 were the market price for an engine, decreasing its price from $125,000 to $75,000 would result in the same change in the production quantity and, thus, total revenue.

Answer 1

False

Step-by-step explanation:

Lowering the price from $125,000 to $75,000 would result in an infinite change in quantity and total revenue, but a competitive firm would never do this since selling below the market price isn't profitable.