(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.Which point falls on Alex's short-run supply curve?

A) P = $5,Q = 10
B) P = $10,Q = 100
C) P = $60,Q = 40
D) P = $20,Q = 300

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Zarah Cabello · Accepted Answer

Final Answer : C, Explanation :  To determine Alex's short-run supply curve, we need to find the points on the table where the marginal cost equals or exceeds the minimum price at which he is willing to produce. We can find the marginal cost by calculating the difference between consecutive variable cost values.For example, the marginal cost of mowing 1 additional lawn (from 10 to 11) is $20 ($120-$100). Therefore, if the price of mowing a lawn is below $20, Alex will not be willing to mow any additional lawns beyond 10.We can repeat this calculation for each interval in the table to find Alex's short-run supply curve. The point where the marginal cost equals or exceeds the minimum price is his supply quantity at that price.For option C, the marginal cost of mowing an additional lawn (from 40 to 41) is $60, which is equal to the price of $60 for each lawn. Therefore, Alex is willing to mow 40 lawns at a price of $60 or higher. This means that point C falls on Alex's short-run supply curve.Option A: The marginal cost of mowing an additional lawn (from 10 to 11) is $20, which is higher than the given price of $5 per lawn. Therefore, Alex will not mow any additional lawns beyond 10 at a price of $5.Option B: The marginal cost of mowing an additional lawn (from 100 to 101) is $120, which is higher than the given price of $10 per lawn. Therefore, Alex will not mow any additional lawns beyond 100 at a price of $10.Option D: The marginal cost of mowing an additional lawn (from 300 to 301) is $200, which is lower than the given price of $20 per lawn. Therefore, Alex will be willing to mow additional lawns at a price of $20 or higher, but it is not clear how many additional lawns he would mow beyond 300. Thus, we cannot determine a specific point on his short-run supply curve from this option.

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