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?
A) $300 B) $900
C) $1,000 D) The marginal benefit cannot be determined.
C
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Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for another company for $30,000 a year, we would conclude that:
A) the firm is incurring an economic loss. B) implicit costs are $25,000. C) the total economic costs are $100,000. D) the individual is earning an economic profit of $25,000.
Which of the following is most influenced by changes in the discount rate?
a. the interest rate paid on savings b. the commercial loan rate c. the installment loan rate d. the mortgage loan rate
An oligopoly using a maximin strategy must believe that the losses from underestimating a competitor’s skill are worse than those from overestimating it.
Answer the following statement true (T) or false (F)
Which of the following are both correct?
a. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect. b. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect. c. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect. d. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect.