Katie is planning to sell her house, and she is considering two upgrades to the house before listing it for sale. replacing the carpeting will cost $6,000 and replacing the roof will cost $12,000. katie expects the the new carpeting will increase the value of her house by $7,000 and the new roof to increase the value of her house by $10,000a. she should replace the roof but not the carpeting. b. she should not make either improvement to her house. c. she should make both improvements to her house. d. she should replace the carpeting but not the roof. i said d. am i wrong? either way if im wrong or right can some explain it to me?

D. She should replace the carpeting but not the roof.

Explanation:

Consider the following steps;

Step 1: Determine net value if she replaces the carpeting alone

Net value=Initial value+added value-carpeting cost

where;

Initial value=unknown, assume to be 0

added value=$7,000

carpeting cost=$6,000

replacing;

Net value=0+7,000-6,000=$1,000

Step 2: Determine net value if she replaces the roof

Net value=Initial value+added value-roof replacement cost

where;

initial value=assumed to be 0

added value=$10,000

roof replacement cost=$12,000

replacing;

Net value=0+10,000-12,000=-$2,000

Roof replacement will reduce the house value by -$2,000

Step 3: Determine net value if she decides to do both

Net value=net value for carpeting+net value for roofing

where;

net value for carpeting=$1,000

net value for roofing=-$2,000

replacing;

Net value=1,000+(-2,000)=-$1,000

If she decides to consider the two upgrade the house value will reduce by -$1,000

Step 4: Take the choice with the best value

The most valuable option would be to consider replacing the carpeting alone. By doing this, the value of the house rises by $1,000

the answer would be voluntary exchange -

"the act of buyers and sellers freely and willingly engaging in market transactions. moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred."

hope this : )

-shy

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