Cassie\'s Quilts alters, reconstructs and restores heirloom quilts. Cassie has j
ID: 2494848 • Letter: C
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 should she do?
She should cut her losses and sell the quilt now.
It does not matter what she does; she is going to take a loss on her project.
She should purchase the period fabric, complete the task and then sell the quilt.
She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.
She should cut her losses and sell the quilt now.
It does not matter what she does; she is going to take a loss on her project.
She should purchase the period fabric, complete the task and then sell the quilt.
She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.
Explanation / Answer
She should purchase the period fabric, complete the task and then sell the quilt.
In the above scenario, Marginal benefit of Cassie is $ 900 while marginal cost is $ 200. Since MB is greater than the MC so Cassie has to continue the production of the good and sell it after its completion.
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