Question

You own a gas station. You have found that the cost of keeping your store open is $35 per hour for labor and electricity. Between midnight and 5:00 AM, you sell only 100 gallons of gas per hour. Your markup on gas is $0.25 per gallon. Should you keep your business open all night? Explain your answer.

Answer 1

Based on the cost of $35 per hour to operate and revenue of $25 per hour from gas sales, it is not financially prudent to keep the gas station open between midnight and 5:00 AM.

Step-by-step explanation:

When assessing whether you should keep your gas station open between midnight and 5:00 AM, you must compare your operating costs with your revenue from gas sales. Your operating costs amount to $35 per hour, while your revenue from selling 100 gallons of gas per hour at a markup of $0.25 per gallon would be $25 per hour. Since your costs exceed your revenue by $10 per hour during these hours, it would not be financially prudent to keep the gas station open all night based on the data provided.