Question

Assume you have a lawn mowing business. You currently charge $15/lawn and can mow 5 lawns in an 8 hour day. You have more people asking for your service, but you cannot service them with your current resources. You can hire an assistant for $8/hour or you can rent a riding lawn mower (that will allow you to mow 7 lawns a day) for $100/week plus $25 for gas. You believe you can add 25 more customers. You only work 5 days a week. What is your best option? Explain why you believe this is your best choice.

Answer 1

according to the situation

you can work 8 hours in a day and mow 5 lawns thus revenue= $15*5*5=$375/week

Option-1 Hire assistant

cost bear= $8*7*5=$280/week

Option-2 Give mower machine for rent for $100 plus $25/ week

that will mow 7 lawns a day.

Conclusion:

Option-1

Profit is what you will get net of cost of hiring that is

($15*7*5)-($8*7*5)=$525-$280=$245

Option-2 Give mower machine for rent

Rent of $100 per week but here you have a loss because machine productivity is much higher than what you will get in return.

so you will choose option 1.