Question

Jason, a highminusschool student mows lawns for families in his neighborhood. The going rate is​ $12 for each lawnminusmowing 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? A. If Jason raises his​ price, he would lose all his customers. B. He would lose some but not all his customers. C. ​Initially, his customers might complain but over time they will come to accept the new rate. D. If Jason raises his​ price, then all others supplying the same service will also raise their prices.

Answer 1

Answer:

B. He would lose some but not all his customers.

Explanation:

Since he has more experience, and as long as his customers are satisfied with his work, he may keep most of them. However, he would lose customers if, 1) his work is poor and not worth the new cost, or 2) the price is too high and his customer cannot afford it.

However, if his service is poor, then he would lose all his customers.

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Answer 2

Answer:

B. He would lose some but not all his customers.

Explanation:

If the market for lawn mowing services is perfectly​ competitive and if Jason raised his price, he would lose some but not all his customers.