To open a new business,a manager must obtain a license from the city for $20,000.The license is transferable,but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs?
Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license,should the manager accept the offer?

Question

To open a new business,a manager must obtain a license from the city for $20,000.The license is transferable,but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs?
 Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license,should the manager accept the offer?

Quizplus · Accepted Answer

The Answer of To open a new business,a manager must obtain a license from the city for $20,000.The license is transferable,but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs?
 Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license,should the manager accept the offer?

To Open a New Business,a Manager Must Obtain a License