Alex brought his lunch today but now a coworker has asked him to go to the deli across the street. Select the correct statement from the following.
A) The cost of the lunch Alex had brought is relevant to Alex's decision to have lunch with his friend.
B) The cost of the lunch that Alex had brought has nothing to do with his current decision.
C) The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
D) The cost of the lunch Alex already has represents the opportunity cost of dining with his friend.

Question

Quizplus · Accepted Answer

The cost of the lunch Alex already has represents the opportunity cost of dining with his friend. The opportunity cost is the value of the next best alternative forgone, which in this case is the cost of the lunch Alex brought. Option A is incorrect because the cost of the lunch Alex brought is a sunk cost and should not influence his decision. Option B is incorrect because the cost of the lunch Alex brought is still relevant as the opportunity cost. Option C is incorrect because the cost to buy lunch at the deli is relevant and should be considered by Alex.

Alex Brought His Lunch Today but Now a Coworker Has