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 the marginal cost of completing the task?

Question

Quizplus · Accepted Answer

The marginal cost of completing the task is calculated by subtracting the cost of the machine in its current state ($1,000) from the cost of completing the restoration ($1,100), resulting in a marginal cost of $100. 
Since Pookie expects to sell the fully restored machine for $2,000, he will earn a profit of $900 ($2,000 - $1,100) if he completes the restoration. On the other hand, if he sells the machine in its current state for $1,000, he will only earn a profit of $700 ($1,000 - $300). 
Therefore, the best choice for Pookie is to complete the restoration and sell the machine for $2,000.

Pookie's Pinball Palace Restores Old Pinball Machines