Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic one-colour pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier three-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 three-colour pinstripe application?
A) Yes, she still makes a profit by selling the three-colour application.
B) Yes, but only if she lowers the price of the one-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 three-colour application is $35 (basic) + $40 (additional) = $75. She charges $175, so her profit is $175 - $75 = $100, which is higher than the profit from the one-colour application ($95 - $35 = $60).

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