(Table: Variable Costs for Lawns) Use Table: Variable Costs for Lawns.During the summer,Alex runs a lawn-mowing service,and lawn-mowing is a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of mowing each of the lawns from 1 through 10 is $10.Also assume that he can only mow the quantities of lawn given in the table (and not numbers in between) .His only fixed cost is $1,000 for the mower.His variable costs include fuel,his time,and mower parts.If the price for mowing a lawn is $40,how many lawns will Alex mow?

A) 0
B) 20
C) 30
D) 40

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kainat iqtidar · Accepted Answer

Final Answer : C, Explanation :  To maximize profit, Alex should continue to mow lawns as long as his marginal revenue (price) exceeds his marginal cost. Looking at the table, we can see that his marginal cost for mowing the first 30 lawns is less than $40 (the price), so he will continue to mow up to 30 lawns. Beyond 30 lawns, his marginal cost exceeds $40 and he will no longer make a profit, so he will not mow any additional lawns. Therefore, the optimal number of lawns for Alex to mow is 30.

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