Pookie\'s Pinball Palace restores old Pinball machines. Pookie has just spent do
ID: 1220919 • Letter: P
Question
Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent dollar 300 purchasing and cleaning a 1960s-era machine which he expects to sell for dollar 2, 000 once he Is finished with the restoration. After having spent dollar 300, Pookie discovers that he will need to rewire the entire machine at a cost of dollar 1, 100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for dollar 1, 000. What is his marginal benefit if he sells the machine "as is" now? What is the marginal cost of completing the task? Should he sell the machine now, or finish the restoration first and then sell it? Eva runs a small bakery. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of dollar 12 per hour. Refer to the table above. Using marginal analysis, determine how many hours should Eva extend her bakery's hours of operations. What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour? What is Eva's marginal cost if she decides to stay open for two hours instead of one hour? In a market economy, who decides what goods and services will be produced?Explanation / Answer
1. a. if he sells the machine as it is, he will get a profit of $400. he buy it for $300 and spend aditional $300 as expenses. now he can sell it for $1000, so total cost is $600 and total revenue is $1000, 1000-600= $400 profit
b. the marginal cost is $1100 to complete the task
c. if he complete the restoration and sell it in market he will get $2000 and the total cost will be= $1100+300+300= $1700 and the profit is = 2000-1700= $300
so it is better to sell the machine as it is
2. b. her marginal benefit is - $13 (60-35-12)
c. her marginal cost is $12, because she has to pay the wage of $12 for the worker
3. the demand and supply will decided the demand and supply of goods