Use the Following to Answer Questions

question 173

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, and lawn-mowing is 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. If the price for mowing a lawn is $60, how much is Alex's total cost at the profit-maximizing output?

• A) $60
• B) $1,100
• C) $2,400
• D) $2,100

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Definitions:

Simple Interest

A method of calculating the interest charge on a loan or financial product based on the original principal amount and the rate of interest over a specific time period, without compounding.

Interest on Interest

Earnings from reinvesting the interest received from an investment, leading to exponential growth over time.

Annually

Concerning an event that takes place annually.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains unpaid, not including interest on interest.