Jim,a Student at Southern Province University,is Enrolled in 15 Credit

question 202

Multiple Choice

Jim,a student at Southern Province University,is enrolled in 15 credit hours this semester.He is passing Calculus,but just barely,so he is considering withdrawing from the course.He tells a friend,"I would drop the course but I don't want to waste the $500 I paid in tuition." His friend replies,"The $500 tuition you paid for the course is irrelevant to your decision.Your grade in the course is the only thing that is important now." The friend is

• A) incorrect,because the tuition will have to be paid again when Jim retakes the course.
• B) correct,because the tuition is an average cost and average costs should never be considered when making decisions.
• C) incorrect,because the tuition is a marginal cost and marginal costs should always be considered when making decisions.
• D) correct,because the tuition is a sunk cost and sunk costs should not be considered when making decisions.
• E) incorrect,and obviously so rich that money means nothing to him/her.

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Definitions:

Financial Resources

The funds used to acquire the natural and human resources needed to provide products; also called capital.

Primary Funding

Primary Funding refers to the initial capital raised by a business or project from various sources such as equity, debt, or grants to finance its startup and initial operations.

Operations

The day-to-day activities involved in managing and controlling the processes of production or provision of services in an organization.