Use the Following to Answer Questions

question 82

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 $40, how much is Alex's total cost at the profit-maximizing output?

• A) $1,000
• B) $1,200
• C) $500
• D) $1,500

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Definitions:

Annuity

A financial product that provides a series of payments made at equal intervals, which can be used as a retirement income strategy.

Interest

Interest is the cost of borrowing money, typically expressed as an annual percentage rate, or the earnings from lending money.

Investments

Assets or items acquired with the goal of generating income or appreciation, including stocks, bonds, real estate, or business ventures.

Savings

Money set aside for future use, often stored in accounts that accrue interest over time, helping to protect against financial emergencies or to finance future purchases.