Ivanhoe Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Ivanhoe is unable to carry all the varieties of kits originally assembled and must choose between two basic packages. The basic kit includes undyed uncut reed (with dye included) for weaving one basket. This basic package costs Ivanhoe $8 and sells for $23. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer needs only to soak reeds and weave the basket. Ivanhoe produces the Stage 2 kit by using the materials included in the Basic kit.

Because she is more efficient at cutting and dying reeds than her average customer, Ivanhoe is able to produce two Stage 2 kits in one hour from one Basic kit. (She values her time at $28 per hour.) The Stage 2 kit sells for $36.