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.

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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. For the following total revenue and total cost functions of a firm: TR = 800Q – 10Q2 TC = (2/3)Q3 -30Q2 + 672Q +4000 (a) Determine the level of output at which the firm maximizes total profit (b) Calculate the profit (need step by step, please)
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