1. The Cleaning Crew cleans 100 homes per week and earns a weekly economic profi

Question

1. The Cleaning Crew cleans 100 homes per week and earns a weekly economic profit of $200. The Cleaning Crew charges $80 per home. What is the Cleaning Crew's total cost per week? 2. In the long run, the Martha Mowers can assemble 300 mowers per week at a total cost of $18,000, 400 mowers at a total cost of $24,000, or 500 mowers at a cost of $35,000. For long-run output between 400 and 500 lawn mowers, Martha Mowers experiences: A. Economies of scale B. Diseconomies of scale C. Constant returns to scale 3. When Better Beds produces 40 beds per day, its average variable cost is $600, its average total cost is $800, and its marginal cost is $700. When Better Beds increased production from 39 to 40 beds per day: A. Average total cost remained at $800 per day. B. Average total cost fell. C. Average total cost rose. D. There is no way to know how average total cost changed.

Explanation / Answer

If they make $200 in profits a week and cleans 100 homes in that period, their profit per home is $2. For each home, if they charge $80 and they are making $2 profits, their costs must be $78 per home. So their total cost for 100 homes is $78 * 100 = $7,800.

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