In exhibit 7-15, if the market price of mowing lawns is $16 per lawn, then e-z-care will earn the biggest profit by mowing:

B. 8 lawns per day.

Explanation:

As seen in the graph below, The AVC and ATC curves intersect the MC curve at the minimum of the MC curve. The marginal cost curve intersects the AVC curve to the right of the minimum of the AVC curve. It also intersects the ATC curve to the right of the minimum of the ATC curve. At first, marginal cost decreases with additional output, but then it increases with additional output. The firm’s profit-maximizing level of output will occur where MR = MC (or at a level close to that point).

Therefore, from the graph; at $16 per lawn, the maximum profit = 8 lawns per day.

answer decisions made by individual households and firms;