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. Reservation Customer Price A $ 36 B 34 C 32 D 30 E 28 F 26 G 24 H 22 If Lydia charges the same price to all of her customers, then what price should she charge if she wants to maximize her profit? Multiple Choice $34 $30
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Step 1: To maximize profit, Lydia should charge the highest price that still allows her to serve all 8 customers. Show more…
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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. Customer Reservation Price A $ 36 B 34 C 32 D 30 E 28 F 26 G 24 H 22 If Lydia charges the same price to all of her customers, then how many lawns should she mow each week? Select one: a. 2 b. 3 c. 4 d. 5
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Tim mows neighborhood lawns for extra money. Suppose that he would be willing to mow one lawn for $10, a second lawn for $15, and a third lawn for $24. Also suppose that three neighbors are interested in having their lawns mowed. Mrs. Jones would be willing to pay $31 to have her lawn mowed, Mr. Wilson would be willing to pay $30, and Ms. Smith would be willing to pay $24. If Tim offers to mow lawns for $24 each, what will be his producer surplus? $ nothing. (Enter a numeric response using an integer.)
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