Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-colour pinstriping job is $35, and she charges $95 for this service.For a total price of $175, Allison will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package.Should Allison continue to offer the 3-colour pinstripe application?
A)Yes, she still makes a profit by selling the 3-colour application.
B)Yes, but only if she lowers the price of the 1-colour application.
C)No, her marginal benefit is less than her marginal cost.
D)More information is needed for Allison to make this decision.

Question

Quizplus · Accepted Answer

Allison's cost for the 3-colour pinstripe application is $75 ($35 for the basic 1-colour job plus $40 for the extra colours), and she charges $175 for this service. Therefore, her profit for the 3-colour application is $100 ($175 - $75). Since she makes a profit, it would be beneficial for her to continue offering this service.

Allison's Auto Art Is a Company That Applies Pinstripes to Vehicles.Allison's