Question

Allison's Auto Art is a company that applios pinstripes to vehicles. Allison's cost for a basic 1 -color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe ap Should Allison continue to offer the 3-color pinstripe application? A. no, her marginal benefit is less than her marginal cost B. yes, but only if she lowers the price of the 1-color application C. yes, she stil makes a profit by selling the 3-color application D. More information is needed for Alison to make this decision.

Answer 1

Answer:

C. yes, she still makes a profit by selling the 3-color application.

Explanation:

As for the information provided,

Cost for 1 color pin striping job = $35

Cost for three color pin striping job accordingly = $35 $\times$ 3 = $105

Price charged for pin striping is as follows:

For 1 color = $95

For 3 colors = $175

Even on 3 color striping there is a profit of $70, thus, it should be sold.

As there is no loss, although the profit margin is decreased as a percentage of cost when compare to margin on 1 color pin striping.

Thus, correct option is Statement C.