An Example of Someone Who Irrationally Considers Sunk Costs When

question 11

Multiple Choice

An example of someone who irrationally considers sunk costs when making a decision is most likely:

• A)someone who paid $50 for a ticket to a baseball game and ends up sitting through the entire game in the freezing rain without a jacket.
• B)a family that pays $20 to enter a state park for the day and leaves after an hour.
• C)a family that pays $20 to enter a state park for the day and stays all day.
• D)someone who paid $50 for a ticket to a baseball game and ends up sitting through the entire game enjoying himself.

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Definitions:

Realized

Refers to profits or losses that have been made official by a transaction or event, distinguishing them from unrealized or paper profits or losses.

Taxed

The imposition of a financial charge or other levy upon a taxpayer by a governing state or the functional equivalent of a state.

Forward Contracts

Financial derivatives that obligate the buyer to purchase, and the seller to sell, a particular asset at a predetermined future date and price.

Specified Limit

A predefined restriction or boundary that determines the maximum or minimum value that an action or decision may reach.