Sadie just bought a new karaoke machine to replace her old one.Her old one works perfectly fine and would sell on Craigslist for $50.The fact that Sadie would not pay $50 for it,yet continues to let it sit in her closet unused is explained by:

Question

Quizplus · Accepted Answer

The implicit cost of ownership is the value of the next best alternative that is given up when a choice is made. In this case, the implicit cost of ownership of the old karaoke machine is the $50 that Sadie could get for it if she sold it on Craigslist. Since Sadie is not willing to pay $50 for the old karaoke machine, she is effectively valuing it at less than $50. This is because she is taking into account the fact that she could get a new karaoke machine for $50, and she would rather have the new karaoke machine than the old one.

Sadie Just Bought a New Karaoke Machine to Replace Her