Question

True or False: If Nick'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 $60,000 would result in a decrease in the production quantity, but an increase in total revenue.

Answer 1

False. As the market price for a good falls the demand rises for a product. Hence the the production quantity of a good will rise long with total revenue, as revenue is the summation of costs and profits.