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 is the $50 that Sadie could get for her old karaoke machine if she sold it on Craigslist. Since Sadie would not pay $50 for it, yet continues to let it sit in her closet unused, this suggests that she is irrationally considering sunk costs.

Sadie Just Bought a New Karaoke Machine to Replace Her