Question

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?

Answer 1

The marginal benefit of Pookie selling the machine "as is" now is $1,000.

Step-by-step explanation:

To determine the marginal benefit if Pookie sells the machine "as is" now, we need to compare the amount he will receive by selling it immediately ($1,000) to the amount he expects to receive after finishing the restoration ($2,000).

By selling it now, Pookie will receive $1,000, whereas if he completes the restoration, he expects to receive $2,000.

Therefore, selling the machine "as is" now would result in a marginal benefit of $1,000.