Final answer:
Relevant costs are future costs that represent differences between decision alternatives and are essential in decision-making. Sunk costs, which have already occurred, should not influence decisions within the budget constraint framework. Option A
Step-by-step explanation:
Relevant costs in decision-making refer to those future costs that will be incurred as a result of choosing one alternative over another. These are costs that have not yet been incurred and will affect future cash flows.
In contrast, sunk costs are costs that have already been incurred in the past and cannot be recovered; they are not relevant for future decision-making. Hence, when considering budget constraints and decision-making, it's important to focus only on costs that will change as a result of the decision at hand.
Answering the student's question, the correct option is A: Relevant costs in decision-making: A. are future costs that represent differences between decision alternatives. These costs are important in the budget constraint framework because they influence the additional marginal gains or losses that will arise from choosing one alternative over another. Option A