Beth’s Lawn Mowing Service is a small business and operates in a perfectly competitive market. The costs function for Beth’s company is given by: total cost (TC) =0.1q2 + 10q + 50 and marginal cost (MC)=0.2q + 10, where q=the number of acres Beth chooses to mow in a week.
a. How many acres should Beth choose to mow in order to maximize pro?t if the prevailing market price of lawn mowing is $20 per acre? Calculate Beth’s maximum weekly pro?t.
b. How many acres should Beth choose to mow if the market price of lawn mowing is $12 per acre? Calculate the pro?t (loss) at this price level.
c. Calculate the price at which Beth’s company is making zero pro?t.