Lisa's Lawn Company is a lawn-mowing firm in a perfectly competitive market for lawn-mowing services. Table Q2(a) sets out Lisa’s costs and revenue at the market price of RM30 a lawn: Quantity (lawn per hour) Table Q2(a): Costs and Revenues of Lisa’s Lawn Company Marginal Revenue Total Cost (RM) Marginal Cost Total Revenue (RM) (RM) (RM) 30 30 30 40 10 60 90 30 30 55 15 3. 75 20 4 120 30 100 25 5 150 30 130 30 6. 180 30 165 35 (i) Identify the quantity of lawn per hour that maximised the profit earned by the firm. (ii) Calculate the amount of Lisa's maximum profit in the short run. (iii) In the long run a firm in perfect competition makes normal profit which is equal to zero. Explain graphically how free entry and exit brings the economic profit back to normal profit.

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Chapter1: Making Economics Decisions
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lawn-mowing services. Table Q2(a) sets out Lisa's costs and revenue at the market
price of RM30 a lawn:
Quantity
(lawn per
hour)
Table Q2(a): Costs and Revenues of Lisa’s Lawn Company
Marginal
Revenue
Total
Total Cost
(RM)
Marginal
Cost
Revenue
(RM)
(RM)
(RM)
30
1
30
30
40
10
60
90
30
30
55
15
3
75
20
4
120
30
100
25
5
150
30
130
30
6.
180
30
165
35
(i) Identify the quantity of lawn per hour that maximised the profit earned by the
firm.
(ii) Calculate the amount of Lisa's maximum profit in the short run.
(iii) In the long run a firm in perfect competition makes normal profit which is equal
to zero.
Explain graphically how free entry and exit brings the economic profit back to
normal profit.
Transcribed Image Text:lawn-mowing services. Table Q2(a) sets out Lisa's costs and revenue at the market price of RM30 a lawn: Quantity (lawn per hour) Table Q2(a): Costs and Revenues of Lisa’s Lawn Company Marginal Revenue Total Total Cost (RM) Marginal Cost Revenue (RM) (RM) (RM) 30 1 30 30 40 10 60 90 30 30 55 15 3 75 20 4 120 30 100 25 5 150 30 130 30 6. 180 30 165 35 (i) Identify the quantity of lawn per hour that maximised the profit earned by the firm. (ii) Calculate the amount of Lisa's maximum profit in the short run. (iii) In the long run a firm in perfect competition makes normal profit which is equal to zero. Explain graphically how free entry and exit brings the economic profit back to normal profit.
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