Katarina Receives Two Free Passes to the Waterpark for Her

question 40

Multiple Choice

Katarina receives two free passes to the waterpark for her birthday. She's not a huge fan of waterparks and would never buy such tickets for their face value of $90. A friend offers to buy the tickets from her at face value, but Katarina decides to use the tickets instead. Which of the following statements is true?
I. Katarina should have ignored the $90 sunk cost and sold the tickets.
II. The opportunity cost of keeping and using the tickets is $90.
III. In keeping the tickets, Kate ignored her implicit cost of owning the tickets.

• A)I only
• B)I and III only
• C)II and III only
• D)I, II, and III

---

Definitions:

Profitability

A measurement of the efficiency and effectiveness of a company at generating profits from its operations.

Competition And Profitability

The relationship between the competitiveness of a market and the ability of firms within that market to generate profits.

Competitive Forces

The external factors that influence the competitive position of a firm in an industry or market.

Interdependent

A situation where entities or individuals depend on each other, often seen in economic and social settings.