Ethan paid $3 for a bottle of ThirstAid.Later,while on a hiking trip,he 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 these answers are correct.

Question

Quizplus · Accepted Answer

The $3 original purchase price is a sunk cost and does not affect the decision to sell the ThirstAid for $8. The decision should be based on the current offer and the utility or value Ethan places on the ThirstAid at the moment, not on what was paid for it initially.

Ethan Paid $3 for a Bottle of ThirstAid