Asked by
Gisethe Chavez
on Dec 17, 2024
Verified
Savion is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Savion discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?
A) He should sell the car now for $3,800.
B) He should keep the car since it wouldn't be rational to spend $6,400 restoring a car and then sell it for only $5,800.
C) He should complete the additional work and sell the car for $5,800.
D) It does not matter which action he takes since the outcome will be the same either way.
Restoration Cost
The expenditure required to return a damaged asset to its previous condition or to a condition deemed acceptable.
Potential Buyers
Individuals or organizations that have the interest and ability to purchase goods or services but have not yet made a transaction.
Additional Work
Tasks or assignments added beyond the original scope or requirements, often resulting in extra costs or extended timelines.
- Recognize and determine the opportunity cost associated with different choices.
- Comprehend the fundamentals of cost-benefit analysis and its utilization in daily decisions.
Verified Answer
DR
Learning Objectives
- Recognize and determine the opportunity cost associated with different choices.
- Comprehend the fundamentals of cost-benefit analysis and its utilization in daily decisions.