Question

You have rented your first apartment, signing a lease that commits you to pay $500 each month for 12 months. You have an opportunity to take a trip to Europe during the entire month of June and you will spend $2,000 traveling. Your apartment will be vacant, but because of your lease, you must still pay the rent. The cost of taking the trip to Europe is: ______ .

Answer 1

The cost of taking the trip to Europe is $2.000.

Step-by-step explanation:

It is $2.000 because the $500 June rent is a sunk cost.

Sunk cost refers to those costs that have been already incurred in the past (meaning this the lease that commits you to pay all 12 months of rent) and can not be retrieved.

Whether you chose to take the trip to Europe or not, doesn't change the fact that you have to pay the $500 June rent.