You purchased a ticket to a concert for $40 a month ago. Last week someone invit

Question

You purchased a ticket to a concert for $40 a month ago. Last week someone invited you to a party on the same night as the concert. While you would like to go to the concert, you would rather go to the party. You have tried unsuccessfully to sell the concert ticket. Which of the following statements regarding your situation is TRUE? Why?


a) Since the $40 you paid for the concert ticket represents your opportunity cost of attending the party, it is relevant to how you will decide between the concert and party.
b) You will decide between the concert and party based on whether or not the party will provide you with more than $40 in satisfaction.
c) Because it is a sunk cost, you will consider the $40 you paid for the concert ticket irrelevant in your decision.
d) Because it represents the additional cost of attending the party, you will consider the $40 you paid for the concert ticket in your decision.
e) Since you cannot sell the ticket, there is no cost to going to the party.

Explanation / Answer

d) Because it represents the additional cost of attending the party, you will consider the $40 you paid for the concert ticket in your decision

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