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telo118 [61]
2 years ago
15

Manuel has plans to go to a movie and already has a $10 nonrefundable, nonexchangeable, and nontransferable ticket. Now Poornima

, whom Manuel has wanted to date for a long time, asks him to a concert. Manuel would prefer to go to the concert with Poornima and forgo the movie, but he doesn't want to waste the $10 he spent on the movie ticket.
From the perspective of an economist, if Manuel decides to go to the movie, what has he just done?

1. Incorrectly allowed a sunk cost to influence his decision
2. Made an optimal choice
3. Correctly ignored a sunk cost
Business
1 answer:
Verdich [7]2 years ago
8 0

Answer:

3. Correctly ignored a sunk cost

Explanation:

Sunk costs refer to those costs which have been incurred in the past and which can no longer be recovered. For example, past expenditure on research and development with no current or future benefits represent sunk costs which can no longer be recovered.

Sunk costs are irrelevant for decision making process as they do not relate to current projects and yield no economic benefit.

In the given case, Manuel had already purchased a $10 movie ticket, which can neither be transferred nor eligible for a refund.  Later when he does not exercise the option of going for the movie and opts for a concert instead, the amount of 10$ spent on the movie represents a sunk cost which is non recoverable.

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The management of urbine corporation is considering the purchase of a machine that would cost $340,000 would last for 4 years, a
attashe74 [19]

The net present value of the proposed project is closest to -$80,822.

Since the project saves $80,000 in costs each year, we treat these savings income for the next 4 years. We then calculate the Present value Interest Factor of an annuity using the formula :

PVIF of an annuity = { [ 1 - [ (1+r)⁻ⁿ ] } ÷ r

PVIF of an annuity = { [ 1 - [ (1.09)⁻⁴ ] } ÷ 0.09

PVIF of an annuity = 3.240 (rounded to three decimals)

PV of the cost savings = (3.240*80000) = $2,59,178 (rounded to nearest $)

NPV = PV of cost savings - Value of investment

NPV = 2,59,178 - 3,40,000

3 0
3 years ago
Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand t
Verdich [7]

Answer:

(i)New firms will enter the market.

(iii)In the long run, all firms will be producing at their efficient scale

Explanation:

A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market price is set by the forces of demand and supply.

If firms are earning positive profits, in the long run new firms would enter into the industry and this woold drive positive profits to zero. As a result , firms would be operating at the efficient scale.

I hope my answer helps you

7 0
3 years ago
Read 2 more answers
CAN SOMEONE PLEASE HELP ME WITH MY ECONOMICS CLASS I BEEN STRUGGLING ON IT PLEASEEE HELP ME !!!!
vitfil [10]

Answer:

can u tell me what it is and I'll help

8 0
3 years ago
You have $100 in your lunch account and plan to spend $2.75 each school day. how many school days will it take to spend all of t
zloy xaker [14]
Divide $100/2.75= about 36 days as $2.75* x 36=$99
3 0
3 years ago
Which of the following statements are true regarding owners' equity and ownership rights held in noncorporate entities?
Degger [83]

Answer: A. Owners' equity for proprietorships and partnerships is usually referred to as capital.

B. No distinction is made between invested capital and retained earnings for a proprietorship or a partnership.

C. Neither proprietorships or partnerships issue stock.

Explanation:

The statements that are true regarding owners' equity and ownership rights held in noncorporate entities include:

• No distinction is made between invested capital and retained earnings for a proprietorship or a partnership.

• Neither proprietorships or partnerships issue stock.

• Owners' equity for proprietorships and partnerships is usually referred to as capital.

We should note that sole proprietorships and partnership typically don't have stockholders and shouldn't issue stock as they aren't separated from their founders.

Also, the owners' equity for proprietorships and partnerships is usually referred to as capital. We should note that for a sole proprietorship or a partnership, the equity is the owners capital account which can be seen on the balance sheet.

Based on the above explanation, all the options given above are correct.

5 0
3 years ago
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