In Early July, Jim Lopez Purchased a $70 Ticket to the December

question 16

Multiple Choice

In early July, Jim Lopez purchased a $70 ticket to the December 15 game of the Chicago Titans. (The Titans belong to the Midwest Football League and play their games outdoors on the shore of Lake Michigan.) Parking for the game was expected to cost approximately $22, and Lopez would probably spend another $15 for a souvenir program and food. It is now December 14. The Titans were having a miserable season and the temperature was expected to peak at 5 degrees on game day. Jim is thinking about skipping the game and taking his wife to the movies and dinner, at a cost of $50. The amount of sunk cost that should influence Jim's decision to spend some time with his wife is:

• A) $0.
• B) $20.
• C) $50.
• D) $70.
• E) None of the other answers are correct.

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Definitions:

Economies of Scale

Cost benefits that companies achieve because of their large scale of operations, generally resulting in a lower cost per output unit as the scale increases.

Per-Unit Costs

The average cost for each individual unit of product produced, taking into account all fixed and variable expenses.

Marginal Costs

The incremental cost involved in producing one more unit of a product or service.

Learning Curve

The concept that people improve efficiency and decrease cost over time as they gain experience in a particular task or operation.