By opting to go to the play with Stuart despite her preference for the club, Maddy has correctly ignored a sunk cost, prioritizing current enjoyment over the non-recoverable €50.
If Maddy decides to go to the play with Stuart, she has correctly ignored a sunk cost. In economic terms, a sunk cost is an expenditure that cannot be recovered. The €50 spent on the non-refundable, non-exchangeable, and non-transferable play ticket falls into this category. Economists advise individuals to base their decisions on future costs and benefits rather than considering sunk costs.
By choosing to go to the play with Stuart, Maddy is prioritizing her current preferences and potential enjoyment over the unrecoverable €50. This decision reflects a rational approach, as it aligns with the economic principle of focusing on the marginal costs and benefits of current choices rather than being influenced by past expenditures.
Que. Maddy has plans to go to a play and already has a €50 non-refundable, non-exchangeable, and non-transferable ticket. Now Stuart, whom Maddy has wanted to go out with for a long time, asks her to a club. Maddy would prefer to go to the club with Stuart and forego the play, but she doesn't want to waste the €50 she spent on the play ticket. From the perspective of an economist, if Maddy decides to go to the play with Stuart, what she has just done? Correctly ignored a sunk cost