Question

Revenue and cost (dollars per lawn mowed) ATC MC 36 32 28 20 16 12 10 20 30 40 50 Output (lawns mowed per week) 8) Bill owns a lawn-care company in Windermere, Florida, whose cost curves are illustrater above figure. The market equilibrium price in this perfectly competitive market equals lawn mowed. At this price, how many lawns will Bill mow per week? A) more than 10 and less than 30 D) 50 C) 40 Bill owns a lawn-care company in Windermere, Florida, Florida, whose cost curves an n the above figure. The market equilibrium price in this perfectly competitive marke er lawn mowed. If Bill's average cost curve is ATC, his A) loss; $800 per week C) profit; $1,280 per week equals B) loss; $1,280 per week D) profit; $480 per week e AC curve is U-shaped. At higher ouput levels,AC eventually increases due t 4) diminishing marginal returns increasing returns to scale to capital ) diseconomies of scale phenomena ) a constraint that does not allow the firm to change its production technol )

Answer 1

18)

Revenue and cost (dollars per lawn mowed MC ATC 40 32 28 24 1 6 1 2 8 4 0 10 20 30 40 50 Output (lawns mowed per week)

The profit maximisation quantity will be determined when the price equals MR.

At price $32, Bill will mow 40 lawns per week.

Hence the correct option is C)40

19) Bills total revenue is Price*Quantity i.e. $32*40

TR = $1280

Total Cost = Average Cost*Quantity

= $20*40

=$800

Therefore, Profit = TR-TC

= 1280-800

= $480

Hence the correct option is D) Profit; $480 per week.