Ethan paid $3 for a bottle of ThirstAid.Later while on a hiking trip,she was offered $8 for the ThirstAid.Select the correct statement from the following:
A) The $8 offer is not relevant if Ethan refuses to sell the ThirstAid.
B) If Ethan drinks the ThirstAid,no opportunity cost is associated with his decision.
C) The $3 original purchase price is irrelevant to his decision to sell the ThirstAid.
D) All of the above.

Question

Quizplus · Accepted Answer

An opportunity cost is the sacrifice that is incurred in order to obtain an alternative opportunity.As such,the $8 offer is relevant to Ethan's decision to sell the ThirstAid.Since sunk costs have been incurred in past transactions,they cannot be changed and are not relevant for making current decisions.As such,the $3 original purchase price is not relevant to his decision to sell the ThirstAid.

Ethan Paid $3 for a Bottle of ThirstAid