Ned Buys Old Lawn Mowers, Reconditions Them, and Sells Them

question 84

Multiple Choice

Ned buys old lawn mowers, reconditions them, and sells them for $225. He knows he needs to sell 80 mowers to break even. Calculate Ned's variable cost per lawn mower if his fixed costs are $8,000.

• A) $125
• B) $100
• C) $80
• D) $150

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Definitions:

Comparative Advantage

The ability of a country or company to produce a particular good or service at a lower opportunity cost than its competitors.

Producing

The process of creating goods or services through the combination of labor, materials, and technology.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity, compared to another individual or group.

Constant Costs

Expenses that remain unchanged over a certain range of output or scale of operation.