Asked by Barbara Circle on Jul 30, 2024
Verified
You purchase a $30, nonrefundable ticket to a play at a local theater. Ten minutes into the show you realize that it is not a very good show and place only a $10 value on seeing the remainder of the show. Alternatively you could leave the theater and go home and watch TV or read a book. You place an $8 value on watching TV and a $12 value on reading a book.
A) You should stay and watch the remainder of the show.
B) You should go home and watch TV.
C) You should go home and read a book.
D) You should go home and either watch TV or read a book.
Nonrefundable Ticket
A ticket purchase that cannot be returned for a refund, often cheaper than refundable options and common in air travel.
Remainder
The amount left over or remaining after division or allocation.
Alternative
An option or choice that is available as a substitute or replacement for something else.
- Apply the concept of opportunity costs and sunk costs to business decisions.
Verified Answer
GF
Griffin FergusonAug 05, 2024
Final Answer :
C
Explanation :
The $30 spent on the ticket is a sunk cost and should not influence the decision. Reading a book has the highest value ($12) compared to the value placed on watching the remainder of the show ($10) or watching TV ($8).
Learning Objectives
- Apply the concept of opportunity costs and sunk costs to business decisions.