(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 $60,how much is Alex's profit at the profit-maximizing output?

A) $10
B) $2,400
C) $300
D) $2,100

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Andrew Howell · Accepted Answer

Final Answer : C, Explanation :  To find profit-maximizing output, we need to look for the quantity of lawns where marginal cost equals price. From the table, we can see that this occurs at mowing 30 lawns.Total variable cost for mowing 30 lawns is $310 (10 lawns at $10 each, 10 lawns at $15 each, and 10 lawns at $20 each).Total revenue from mowing 30 lawns is $1,800 (30 lawns at $60 each).Total cost, including fixed cost, is $2,310 ($1,000 fixed cost + $310 variable cost).Therefore, Alex's profit at the profit-maximizing output is $300 ($1,800 revenue - $2,310 total cost).

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