Question

Cassie's Quilts​ alters, reconstructs, and restores heirloom quilts. Cassie has just spent​ $800 purchasing,​ cleaning, and reconstructing an antique quilt which she expects to sell for​ $1,500 once she is finished. After having spent​ $800, Cassie discovers that she would need some special period fabric that would cost her​ $200 in material and time in order to complete the task. ​ Alternatively, she can sell the quilt​ "as is" now for​ $900. What is the marginal cost of completing the​ task?

Answer 1

Answer:

The marginal cost is $200 that she needs to complete the task.

Explanation:

Giving the following information:

Cassie has just spent​ $800 purchasing,​ cleaning, and reconstructing an antique quilt which she expects to sell for​ $1,500 once she is finished. After having spent​ $800, Cassie discovers that she would need some special period fabric that would cost her​ $200 in material and time to complete the task. ​ Alternatively, she can sell the quilt​ "as is" now for​ $900.

The $800 is a sunk cost. Now we need to determine the marginal cost. The marginal cost is $200 that she needs to complete the task.