Use the Following to Answer Question

question 197

Multiple Choice

Use the following to answer question:
-(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 profit at the profit-maximizing output?

• A)-$10
• B)-$300
• C)$300
• D)-$1,000

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs that are required to transform raw materials into finished goods.

Depreciation

The methodical distribution of the expense of a physical asset throughout its expected lifespan.

Oven

An enclosed compartment, usually part of a stove, used for cooking and baking.

Factory Supplies

Items used in the manufacturing process that are not directly part of the final product, including cleaning supplies, tools, and machinery maintenance materials.