In early July, Jim Lopez purchased a $70 ticket to the December 15 game of the Chicago Titans. (The Titans belong to the Midwest Football League and play their games outdoors on the shore of Lake Michigan.) Parking for the game was expected to cost approximately $22, and Lopez would probably spend another $15 for a souvenir program and food. It is now December 14. The Titans were having a miserable season and the temperature was expected to peak at 5 degrees on game day. Jim is thinking about skipping the game and taking his wife to the movies and dinner, at a cost of $50. The amount of sunk cost that should influence Jim's decision to spend some time with his wife is:
A) $0.
B) $20.
C) $50.
D) $70.
E) None of the other answers are correct.

Question

Quizplus · Accepted Answer

Sunk cost is the cost that has already been incurred and cannot be recovered. In this case, the $70 for the game ticket is a sunk cost because Jim has already paid for it and cannot get a refund. The cost of parking, souvenir program, and food are also sunk costs because they have already been paid for or committed to. Therefore, these costs should not influence Jim's decision to spend time with his wife. He should evaluate the decision based on the cost and benefit of going to the game versus going to the movies and dinner on that day.

In Early July, Jim Lopez Purchased a $70 Ticket to the December