Suppose Lydia owns the only lawn-mowing business in the small town of Pleasant Pastures. There are 8 people each week whose lawns she might cut, each with a reservation price given in the accompanying table. Assume that the marginal cost of mowing each lawn is constant and equal to $25.
$$\begin{array} { | c | c | }
\hline \text { Custamer } & \begin{array} { c }
\text { Reservition } \
\text { Price }
\end{array} \
\hline \mathrm { A } & \$ 36 \
\hline \mathrm { B } & \$ 34 \
\hline \mathrm { C } & \$ 32 \
\hline \mathrm { D } & \$ 30 \
\hline \mathrm { E } & \$ 28 \
\hline \mathrm { F } & \$ 26 \
\hline \mathrm { G } & \$ 24 \
\hline \mathrm { H } & \$ 22 \
\hline
\end{array}$$ If Lydia charges the same price to all of her customers, then what price should she charge if she wants to maximize her profit.
A)$34
B)$30
C)$26
D)$32

Question

Suppose Lydia owns the only lawn-mowing business in the small town of Pleasant Pastures. There are 8 people each week whose lawns she might cut, each with a reservation price given in the accompanying table. Assume that the marginal cost of mowing each lawn is constant and equal to $25.  
$$\begin{array} { | c | c | } 
\hline \text { Custamer } & \begin{array} { c } 
\text { Reservition } \
\text { Price }
\end{array} \
\hline \mathrm { A } & \$ 36 \
\hline \mathrm { B } & \$ 34 \
\hline \mathrm { C } & \$ 32 \
\hline \mathrm { D } & \$ 30 \
\hline \mathrm { E } & \$ 28 \
\hline \mathrm { F } & \$ 26 \
\hline \mathrm { G } & \$ 24 \
\hline \mathrm { H } & \$ 22 \
\hline
\end{array}$$ If Lydia charges the same price to all of her customers, then what price should she charge if she wants to maximize her profit.
A)$34
B)$30
C)$26
D)$32

Quizplus · Accepted Answer

Lydia should charge $32 to maximize her profit. At this price, she can serve customers A, B, and C, each paying $32, which is above her marginal cost of $25, maximizing her profit while ensuring demand from these three customers.

Suppose Lydia Owns the Only Lawn-Mowing Business in the Small