Use the Following to Answer Question

question 130

Multiple Choice

Use the following to answer question:
-(Table: Variable Costs for Lots) Use Table: Variable Costs for Lots.During the winter,Alexa runs a snow-clearing service in a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of clearing each of the lots from 1 through 10 is $20.Also assume that she can only plow the quantities of the lots given in the table (and not numbers in between) .Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel,her time,and hot coffee.If the price to clear a lot is $60,what is Alexa's profit or loss at the optimal output?

• A)$3,000
• B)$1,100
• C)$900
• D)$3,850

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Definitions:

Loss Leader

A pricing strategy whereby a business offers a product or service at a lower price in an attempt to attract more customers.

Psychological Pricing

A pricing strategy that plays on the psychological perception of prices by consumers, often using prices that are slightly lower than a round number to encourage purchases.

Value-Based Pricing

A pricing method that involves pricing a product based on how it benefits the customer.

Customer-Led Pricing

A pricing strategy that relies on understanding and responding to the preferences and willingness to pay of the targeted customers.