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

-In Exhibit 7-15,if the market price of mowing lawns is $16 per lawn,then E-Z-Care will earn the biggest profit by mowing:

Question

Exhibit 7-15 Short-run cost curves for E-Z Care lawn mowing company
 
-In Exhibit 7-15,if the market price of mowing lawns is $16 per lawn,then E-Z-Care will earn the biggest profit by mowing:

Quizplus · Accepted Answer

At the market price of $16 per lawn, the profit-maximizing output level for E-Z Care is where marginal cost equals price, which is at 8 lawns per day. At this level of output, the marginal cost is $16, which is equal to the price. At any other level of output, the marginal cost will either be higher or lower than the price, resulting in lower profits. Therefore, the optimal choice for E-Z Care is to mow 8 lawns per day to earn the maximum profit.

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