Question

(Table: Variable Costs for Garden Maintenance) Use Table: Variable Costs for Garden Maintenance. During the summer, Emma runs a gardening service in a perfectly competitive industry. Assume that costs are constant in each interval; so, for example, the marginal cost of clearing weeds from each of the gardens 1 through 10 is $20. Also assume that she can only tend to the number of gardens given in the table (and not numbers in between). Her only fixed cost is $1,000 for a weeding machine. Her variable costs include fuel, her time, and hot coffee. Which point falls on Emma's short-run supply curve? Table: Variable Costs for Garden Maintenance Quantity of Lots Variable Costs 0 $0 10 200 20 300 30 500 40 750 50 1,100 60 2,100 Question 7 options: P = $40, Q = 10 P = $10, Q = 200 P = $25, Q = 40 P = $16, Q = 0

Answer 1

The average total cost is minimized when Emma tends to 50 gardens. This means that at this quantity, she is able to produce the most gardens at the lowest average cost.

How to get the cost

The short-run supply curve shows the quantity of a good that a firm is willing and able to produce at each price, given its current fixed costs and technology.

This has been illustrated on thge table that has been attached to the question.

Therefore, the point P = $42.0, Q = 50 falls on Emma's short-run supply curve.