Suppose you run a house cleaning business. Assume you have fixed costs for the business of $500 per week - this could be the cost of an office or storage facility. The business can hire cleaners for $1000 per week. The below table shows how the number of houses cleaned per week varies with the number of cleaners hired by the business.

Labour (cleaners per week)	Houses Cleaned (per week)
0	0
1	10
3	20
6	30
10	40
15	50

Assume cleaners or labour to be the only variable cost.

a) Calculate the marginal cost (per house) of providing cleaning services for 10, 20, 30, 40 and 50 houses per week. Along with marginal cost at each output level, you should present fixed, variable, total costs and average fixed, average variable and average total costs. (Hint: it is a good idea to expand the table to present your results). (4 marks)

b) Suppose the current price for house cleaning is $200 per house. How many cleaners should your business employ and how many houses should they clean per week in total? Briefly explain your choice. How much profit will your business make? (3 marks)

c) Suppose the market price for house cleaning rises to $220. Explain based on your cost structure how many cleaners your business should now employ and how many houses they should clean per week in total, given the new higher market price for house cleaning. How much profit will the business make at this output? (3 marks)

Answer rating: 100% (QA)

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