Susan Tran of Nails by Susan wants to increase her sales. Susan considers keeping the nail salon open two extra hours each day.
She estimates that during the last two hours of each day, she and
her staff could provide nail services to five more customers,
bringing in additional revenues averaging $125 a night. Susan
estimates that providing the services to five more customers
each night would cost approximately $25 in supplies. Her
operating expenses for electricity and water will increase by
approximately $20 per night. She would also have to pay two
employees to work the extra two hours at a cost of $30 each.
What is the marginal benefit of staying open an extra two hours a
day? What is the marginal cost? Do you think Nails by Susan
should stay open two extra hours each day? (LO 2.3-2)