Question

​allison's auto art is a company that applies pinstripes to vehicles.​ allison's cost for a basic 1minus−color pinstriping job is​ $35, and she charges​ $95 for this service. for a total price of​ $175, allison will apply a fancier 3minus−color pinstripe application to an​ automobile, a service that adds an additional​ $40 to the total cost of the package. what is the marginal cost of moving up from the 1minus−color application to the 3minus−color ​application?

Answer 1

In economics, marginal cost is the additional expenditure or cost you incur when you buy another more quantity of the product. When Allison bought the 1minus−color application, she spent a total of $130.

$35 + $95 = $130

When she upgraded to 3minus-color application, her cost now increased to 

$175 + $40 = $215

Now, as mentioned, marginal cost is the additional cost incurred when buying one more quantity of the same product. Therefore, marginal cost = Δcost/Δquantity. Thus,

Marginal Cost = ($215-$130)/(3-1)
Marginal Cost = $42.5

The marginal cost is $42.5 per color application.