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Compute the Cost
Compute the Cost. Edward the entrepreneur takes two hours to cut a lawn, and he cuts 100 lawns per year. He uses solar-powered equipment (truck and mower) that will last forever?and can be sold at any time for $20,000. Edward could earn $20 per hour as a pedicurist. The interest rate is 10 percent.
a. Given his current output level, compute his marginal cost $ ..... and average cost is $ ...
Expert Solution
Marginal cost = (2 hours to cut a lawn $20 per hour)
Marginal cost= (2 $20)
Marginal cost= $40
Average cost = (total cost) / (Number of units)
Average cost = {(100 lawns $40) + ($20,000 0.10)}/ 100
Average cost = $6,000 / 100
Average cost = $60
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