Use the Following to Answer Questions

question 231

Multiple Choice

Use the following to answer questions:
-(Table: Variable Costs for Lawns) Look at the table Variable Costs for Lawns. During the summer, Alex runs a lawn-mowing service in a perfectly competitive industry. Assume that costs are constant in each interval; that is, the variable cost of mowing 1 through 10 lawns is $100. His only fixed cost is $1,000 for the mower. His variable costs include fuel, his time, and mower parts. What is Alex's break-even price?

• A) $100.00
• B) $10.00
• C) $50.00
• D) $27.50

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Definitions:

Offering Price

The initial price at which a company's shares are made available to the public during an Initial Public Offering (IPO).

Par Value

Refers to the face value of a bond or the stated value of a stock, indicating the amount that will be paid out at maturity or represented in the corporation's documents.