Intro to MicroEconomics Jason, a high-school student mows lawns for families in

Question

Intro to MicroEconomics

Jason, a high-school student mows lawns for families in his neighborhood. The going rate is S12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price? Initially, his customers might complain but over time they will come to accept the new rate. he would lose some but not all his customers. If Jason raises his price he would lose all his customers. If Jason raises his price, then all others supplying the same service will also raise their prices. Ted's Pancake Kitchen suffers a short-run loss. When should led decide to shut down rather than continue to produce? if his Kitchen's revenue is less than its fixed costs if his Kitchen's revenue is less than its total costs if his Kitchen's revenue is less than its variable costs if his Kitchen's revenue is less than its explicit costs Ben's Peanut Shoppe suffers a short-run loss. In the short-run Ben will continue to operate if his Shoppe's total revenue exceeds his implicit costs, his Shoppe's total revenue exceeds his fixed cost, his Shoppe's total revenue exceeds his variable cost, his Shoppe's total revenue exceeds his capital costs.

Explanation / Answer

8. In a perfect competition if a seller tries to increase price, he/she will not sustain as it is price takers market. So if Jason raises his price he would lose all his customers.

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