IMAGINE: Inspired by a recent class in Economics, you and your friends have looked into the market for lawn mowing, and discovered there is good economic profit. You started a new venture: selling lawn mowing services to residential customers in Prince George. There are many other students offering the service, and there seem to be new ventures opening and closing all the time. You can see that the customers care only about finding the cheapest price for lawn mowing services; they do not care which company they use. You and your friends put your money together to buy all the fancy lawn mowing equipment you need for the company. You invested $1,000 of your savings in the equipment. You also took out a small business loan. The cost of the loan comes to $15 per day for the next 3 years. Your venture must hire labor and purchase bags to collect the trimmings, plus pay the landfill to dispose of the trimmings. After some research you have figured out that the variable cost for labour and supslies increases with the number of customers as follows: Your venture must hire labor and purchase bags to collect the trimmings, plus pay the landfill to dispose of the trimmings. After some research you have figured out that the variable cost for labour and supplies increases with the number of customers as follows: - When weather is good, the price you take from the market is $15.00 per lawn. - When weather goes bad, the demand for lawn mowing drops a lot. You are only able t charge a price $6 per lawn. Imagine that all July and August the weather is good. Currently you are mowing 17 lawns per day. Your friends learn you have taken microeconomics and demand your advice. They want to know the business will be profitable for the next 3 years, and what to do if the weather turns bad. Should you stop offering lawn mowing services? If so, when? Should you close the business and pay off your loans? If so, when? 1. Prepare a 1-2 page report to advise your friends what to do now AND what to do when the weather turns bad. Show your work analyzing the number above. Use the report to help them understand why they should follow your advice. IMAGINE: Inspired by a recent class in Economics, you and your friends have looked into the market for lawn mowing, and discovered there is good economic profit. You started a new venture: selling lawn mowing services to residential customers in Prince George. There are many other students offering the service, and there seem to be new ventures opening and closing all the time. You can see that the customers care only about finding the cheapest price for lawn mowing services; they do not care which company they use. You and your friends put your money together to buy all the fancy lawn mowing equipment you need for the company. You invested $1,000 of your savings in the equipment. You also took out a small business loan. The cost of the loan comes to $15 per day for the next 3 years. Your venture must hire labor and purchase bags to collect the trimmings, plus pay the landfill to dispose of the trimmings. After some research you have figured out that the variable cost for labour and supslies increases with the number of customers as follows: Your venture must hire labor and purchase bags to collect the trimmings, plus pay the landfill to dispose of the trimmings. After some research you have figured out that the variable cost for labour and supplies increases with the number of customers as follows: - When weather is good, the price you take from the market is $15.00 per lawn. - When weather goes bad, the demand for lawn mowing drops a lot. You are only able t charge a price $6 per lawn. Imagine that all July and August the weather is good. Currently you are mowing 17 lawns per day. Your friends learn you have taken microeconomics and demand your advice. They want to know the business will be profitable for the next 3 years, and what to do if the weather turns bad. Should you stop offering lawn mowing services? If so, when? Should you close the business and pay off your loans? If so, when? 1. Prepare a 1-2 page report to advise your friends what to do now AND what to do when the weather turns bad. Show your work analyzing the number above. Use the report to help them understand why they should follow your advice
