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You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car? (LO1-2) Suppose you currently earn $30,000 a year. You are considering a job that will increase your lifetime earnings by $300,000 but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $25,000. You already have a bachelor’s degree, for which you spent $80,000 in tuition and books. Which of the above information is relevant to your decision on whether to take the job? (LO1-2)

Question

You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car? (LO1-2)

 

Suppose you currently earn $30,000 a year. You are considering a job that will increase your lifetime earnings by $300,000 but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $25,000. You already have a bachelor’s degree, for which you spent $80,000 in tuition and books. Which of the above information is relevant to your decision on whether to take the job? (LO1-2)

 

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Step 1

In question 1, it is given that first 150 miles are free while driving. That means, these 150 miles costs are considered as the sunk cost for driving. However, 15 cents are being charged ther...

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