Exhibit 7-15 Short-run cost curves for E-Z Care lawn mowing company

In Exhibit 7-15, suppose the market price of mowing lawns falls to $10 per lawn. In this situation, E-Z-Care will:

Question

Exhibit 7-15 Short-run cost curves for E-Z Care lawn mowing company

In Exhibit 7-15, suppose the market price of mowing lawns falls to $10 per lawn. In this situation, E-Z-Care will:

Quizplus · Accepted Answer

In the short run, E-Z Care will continue to mow lawns despite economic losses because the price of $10 per lawn is still above its average variable cost. However, it may consider exiting the industry or shutting down its operations in the long run if it cannot cover its fixed costs.

Exhibit 7-15 Short-Run Cost Curves for E-Z Care Lawn Mowing