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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

You go out to the best restaurant in town and order a lobster dinner for $40. After eating half of the lobster, you realize that you are quite full. Your date wants you to finish your dinner because you can’t take it home and because “you’ve already paid for it.” What should you do? Relate your answer to the material in this chapter.

To determine
Sunk cost and it relevance.

Explanation

The payment made for dinner is unavoidable and the cost is not recoverable. Thus, it is considered as sunk cost...

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