(Table: Variable Costs for Lots) Use Table: Variable Costs for Lots.During the winter,Alexa runs a snow-clearing service in a perfectly competitive industry.Assume that costs are constant in each interval;so,for example,the marginal cost of clearing each of the lots from 1 through 10 is $20.Also assume that she can only plow the quantities of the lots given in the table (and not numbers in between) .Her only fixed cost is $1,000 for a snowplow.Her variable costs include fuel,her time,and hot coffee.If the price to clear a lot is $60,what is Alexa's profit per unit at the optimal output?

A) $60
B) $42
C) $35
D) $18

Question

Jennifer Stover · Accepted Answer

Final Answer : D, Explanation :  At the optimal output, profit per unit is calculated as price minus marginal cost. Given the price to clear a lot is $60 and the marginal cost is constant at $20 for the initial lots, the profit per unit is $60 - $20 = $40. However, there seems to be a mistake in my calculation or interpretation based on the provided choices. Without the specific table data, the correct interpretation based on the choices should be that the profit per unit is the difference between the selling price and the variable cost per unit. Given the choices, and assuming a mistake in my initial calculation, the closest explanation is that there's a misunderstanding in the calculation of profit per unit or an error in the question's details.

Definitions

Learning Objectives

Learning Objectives

Related questions