(Consider This) Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and tear to drive to the match and $5 to park her car. On the day of the match, Susie's boss offers her $100 to come to work instead. In considering what to do, which of the above would be considered a sunk cost?

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered. In this scenario, the $20 ticket to the match is a sunk cost because Susie has already purchased it and cannot get a refund. The costs associated with driving to the match and parking the car are not considered sunk costs because they can be avoided if Susie decides not to go to the match. The $100 offered by Susie's boss is not a sunk cost because it is a potential future gain, and Susie has not yet committed to accepting it. Therefore, the best choice is A as the sunk cost is irrelevant to the decision of whether to attend the match or not.

(Consider This) Susie Purchased a Nonrefundable Ticket to a Soccer