Suppose You Value Watching a Movie at $5

question 142

Multiple Choice

Suppose you value watching a movie at $5. You rent it from your local movie rental store for $3.50 for one night. You do not get a chance to watch it, so you decide to keep it an extra day and pay a late fee of $2. Your decision is

• A) incorrect; you paid $5.50 to watch a movie you valued at only $5. You should have taken the movie back.
• B) incorrect; you should have returned the movie and rented it later.
• C) correct; the $3.50 paid for the first night is a sunk cost and is not relevant in your decision to keep it an additional night.
• D) correct; you value watching the movie at $5 per night, so keeping it an extra day increases your value of the movie to $10.

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Definitions:

Parallel Circuit

An electrical circuit configuration where multiple paths are available for current flow, resulting in each component having the same voltage applied.

Inductor Value

The measure of an inductor's ability to store energy in a magnetic field, usually identified by its inductance, measured in henries (H).

Inductive Current

Current that is induced by a changing magnetic field, often described in terms of electromagnetic induction or the inductance property in a circuit.

Inductive Reactance

The opposition to the change of current flow due to inductance in an AC circuit, measured in Ohms.