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-(Table: Variable Costs for Lawns) Look at the 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; that is, the variable cost of mowing 1 through 10 lawns is $100. 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 at the profit-maximizing output?

Question

Use the following to answer questions: 
-(Table: Variable Costs for Lawns) Look at the 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; that is, the variable cost of mowing 1 through 10 lawns is $100. 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 at the profit-maximizing output?

Quizplus · Accepted Answer

Alex's profit is calculated as total revenue minus total costs. Total revenue for mowing 10 lawns is $60 x 10 = $600. Total costs are the fixed cost of $1,000 plus the variable cost of $100, totaling $1,100. Profit is $600 - $1,100 = -$500, which means Alex incurs a loss, not a profit. However, if the question implies a different number of lawns, the profit-maximizing output would be where marginal cost equals marginal revenue, which is not directly provided here. Assuming the question implies a different scenario, the closest positive profit choice is $300, but this requires additional context or assumptions.

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