Mark is refinishing an antique china cabinet and has already spent $180 on the restoration.He expects to be able to sell the cabinet for $360.Mark discovers that he needs to do an additional $200 of work to make the cabinet worth $360 to potential buyers.He could also sell the cabinet now,without completing the additional work,for $100.What should he do?

Question

Quizplus · Accepted Answer

If Mark completes the additional work for $200, the total amount spent on restoration would be $380. However, he will be able to sell the cabinet for its expected value of $360. Therefore, although he will not gain any profit, he will at least break even. On the other hand, if he sells the cabinet as it is now for $100, he would incur a loss of $80. Thus, completing the additional work and selling the cabinet for $360 is the best option.

Mark Is Refinishing an Antique China Cabinet and Has Already