Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What is his marginal benefit if he sells the machine "as is" now?

Question

Business

Karla Rowland

8 April, 08:32

Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What is his marginal benefit if he sells the machine "as is" now?

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Answers (1)

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Captain · Answer 1

Marginal benefit = $700

Explanation:

Given:

Purchase price = $300

Without restoration price = $1,000

Marginal benefit (Sell "as is")

Computation of marginal benefit:

Marginal benefit = Without restoration price - Purchase price

Marginal benefit = $1,000 - $300

Marginal benefit = $700

Note: Marginal benefit can be differ if we use after restoration cost.