3. Julio the entrepreneur takes 2 hours to cut a lawn, and cuts 1,000 per year. He uses solar-powered equipment (truck and mower) that will last forever and could be sold at any time for $20,000. Julio could earn $12 per hour as a pedicurist. The interest rate is 10 percent. (20 points)

a. Given his current output level, compute his marginal cost and average cost of cutting lawns. (5 points)

b. Suppose he decides to reduce the number of lawns cut by half, to 500 per year. Compute the new marginal cost and average cost.

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