Molly and Tom are getting married.Last month they hired a caterer for the wedding reception.This month they attended a wedding for which their chosen caterer had provided food,dishes and flowers.Neither thought the food was good and Molly worried that the dishes looked cheap.However,they feel they cannot change caterers at this date due to the large deposit required by the catering company when it took the job.Molly and Tom do not want to pay:
A) Extraneous expenses
B) Opportunity costs
C) Switching costs
D) Fixed costs
E) Retained costs

Question

Quizplus · Accepted Answer

Molly and Tom are concerned about the cost of changing caterers, which are known as switching costs. The large deposit required by the current caterer is likely to be lost if they switch to a different company, making it a sunk cost. The other options listed are not relevant to their specific situation.

Molly and Tom Are Getting Married