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Last Month,Sally Spent $3,000 in Repairing Her Old Car

Question 31

Multiple Choice

Last month,Sally spent $3,000 in repairing her old car.Now her car requires an additional $2,000 in repairs.She could get a comparable car for $2,500.She should


A) repair her car because the money she has already spent repairing the car ($3,000) exceeds the price of the new car ($2,500)
B) buy a new car because sunk costs should be ignored in decision making
C) buy a new car because the price of the new car ($2,500) is less than the total amount she would spend on her current car ($5,000)
D) repair her car since the cost of repairing it is lower than the cost of buying another car
E) repair the car or buy a comparable one because the opportunity costs are the same

Correct Answer:

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