ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:3. Sunk costs and decision making
Charles has plans to go to a play and already has a $50 nonrefundable, nonexchangeable, and nontransferable ticket. Now Dina, whom Charles has
wanted to date for a long time, asks him to a party. Charles would prefer to go to the party with Dina and forgo the play, but he doesn't want to waste
the $50 he spent on the play ticket.
From the perspective of an economist, if Charles decides to go to the party with Dina, what has he just done?
O Correctly ignored a sunk cost
O Made a choice that was not optimal
O Incorrectly allowed a sunk cost to influence his decision
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