Question

Isabella Canton is considering taking a part-time job at a local clothing store. She loves the store and shops there often, but unfortunately, employee discounts are given only to full-time employees. If Isabella takes this job, she would have to withdraw from her Tuesday night basket-weaving class to work. Accepting the job would also mean that Isabella must give up her volunteer work at the local animal sanctuary, an activity that she enjoys a great deal. The new job would pay approximately $125 per week but would cost Isabella $15 per week in gas. Isabella would be able to keep her Saturday afternoon job at the library that pays $40 per week.A list of factors that Isabella has identified follows. For each one, indicate whether it is relevant or irrelevant to Isabella’s decision.The $125 income from the new job.1 2 The $40 income from the library. ?3 The $50 nonrefundable registration fee Isabella paid for the basket-weaving class. ?4 The $15 cost for gas. ?5 The $75 per month that Isabella spends for clothing. ?6 The time Isabella spends volunteering at the animal sanctuary.

Answer 1

Answer:

The $125 income from the new job - relevant (A)

The $40 income from the library - irrelevant   (B)

The $50 nonrefundable registration fee Isabella paid for the basket-weaving class - irrelevant (C)

The $15 cost for gas - relevant (D)

The $75 per month that Isabella spends for clothing and The time Isabella spends volunteering at the animal sanctuary. - Irrelevant (E)

Explanation:

(A) the income from the new job is relevant. It is the wages she will receive per week

(B) the library is irrelevant as it would not have to leave this job

(C) that is a sunk cost. Is irrelevant for the decision making  

(D) the gas is a variable cost related to the job offer. It is relevant

(E) the consumer preferences are not relevant for their decision on the job offer. Also their volunteering is irrelevant.  Is not related to the job