Use the Following to Answer Question

question 230

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 $60,how much is Alex's profit per unit at the profit-maximizing output?

• A)$7.50
• B)$32.50
• C)$20.00
• D)$60.00

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Definitions:

Quantity Theory

An economic theory which proposes that changes in the money supply will directly affect price levels in the economy over the long term.

Money Supply

The total amount of money available in an economy at a specific time, including cash, bank deposits, and other liquid assets.

Price Level

A summarial mean of present prices for goods and services in the broad economy.

Unemployment

The situation when individuals who are capable of working and are looking for a job cannot find employment.