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Production Costs Problem

1 Given the following production and cost information, construct (make) the referenced cost graphs and answer the discussion questions.

Lisa has a lawn-mowing business. Lisa hires students at $40 a day to mow lawns.  Lisa leases 5 lawnmowers for $200 a day.  The production and cost schedule for Lisa’s business is outlined below.

Labor   (Students per Day)         Output   (Lawns Cut per Day)

0                                                     0
1                                                   20
2                                                   44
3                                                   70
4                                                   94
5                                                  114
6                                                  118

Construct (graph) the average fixed cost, average variable cost, and average total cost.

Construct (graph) the corresponding marginal cost schedule.

How lawns should be cut to maximize the business profit?

aalan

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