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## the prevailing… Show more John’s Lawn Mowing Service is a

Paper help Economics the prevailing… Show more John’s Lawn Mowing Service is a

# the prevailing… Show more John’s Lawn Mowing Service is a

the prevailing… Show more John’s Lawn Mowing Service is a small business that acts as a price taker (MR = p), the prevailing market price of lawn mowing is \$20 per acre. Let q be the number of acres John chooses to mow in a week. a) With a free family mower, Johns cost function is TC(q) = 0.1q2 +10q +55. Find his pi-max choice, maximum weekly profits, graph these results and label John’s supply curve. Now, John’s greedy father decides to charge John for the use of family lawn mower. Consider the following four cases. b) Suppose that John’s father charges \$100 per week for John’s use of the mower. How will this affect the acres of lawns John chooses to mow? What will his profits be? c) Suppose instead that John’s father requires John to pay 50% of his weekly profits as the mower charge. How will this affect John’s pi-max choice? d) If Johns father imposes a charge of \$2 per acre for use of the mower. Find Johns new cost function, pi-max choice, maximum weekly profits. How much will John’s father get? e) Suppose finally that John’s father collects 10% of the revenues from each acre John mows. Find John’s pi-max choice, and explain why you get the same result here as for part d). • Show less

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