A lawnmower operates in a perfectly competitive industry and its total costs are given by:
TC(q) = 3q2+ 18q, where q denotes the number of lawns mowed.
(a) (2) What is the firm’s marginal cost?
(b) (3) What is the firm’s average costs? Does the firm have increasing, constant, or decreasing
returns to scale?
(c) (2) Graph the marginal and average cost curves on the same set of axes.
(d) (3) What is the price beneath which this lawnmower would choose to shut down?
(e) (4) If the market price of a mowed lawn is $102 (!), how many lawns will this firm mow? What
is the firm’s average cost at that level of output? How does it compare to the market price?
(f) (6) Find an expression that denotes this firm’s profits as a function of the market price (π(p)).
Your answer should depend on p and otherwise contain only numerical constants. Hint: your
answer should be a piecewise function (see part (d)) and you will need to solve for supply as a
general function of the market price.
