Question

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $15, the cost of mowing the second lawn is $25, and the cost of mowing the third lawn is $40. His producer surplus on the first three lawns of the day is $100. If Ronnie charges all customers the same price for lawn mowing, that price is ______.

Answer 1

Answer:

$45.67

Explanation:

Given:

the cost of mowing the first lawn = $15

the cost of mowing the second lawn = $25

the cost of mowing the third lawn = $40

Producer surplus on the first three lawns of the day = $100

Now,

Producer Surplus = Price paid by consumers - production cost

or

$100 = Price - ( $10 + $12 + $15 )

or

Price = $100 + $37

or

Price = $137

Therefore,

The price for each customer = $\frac{\textup{137}}{\textup{3}}$

or

The price for each customer = $45.67