(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 much is Alex's total cost at the profit-maximizing output?

A) $1,000
B) $1,200
C) $500
D) $1,500

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Balvir tatla · Accepted Answer

Final Answer : D, Explanation :  To determine the profit-maximizing output, we need to find where the price equals the marginal cost (MC). Since the price for mowing a lawn is $40, and assuming costs are constant in each interval, we look for the interval where the MC is closest to but not above $40. Without the specific table, we can't pinpoint the exact quantity, but the principle is that Alex will mow as many lawns as he can where the price per lawn ($40) is at least as much as the marginal cost. His total cost (TC) at this output level includes both the variable costs (VC) of mowing that number of lawns and the fixed cost (FC) of $1,000 for the mower. Since the correct answer must account for both variable and fixed costs and given the options, we infer that at the profit-maximizing output, the total cost is higher than the fixed cost alone, indicating that D) $1,500 is the correct answer, suggesting that his variable costs plus fixed costs at this output level amount to $1,500.

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