Question:

More econ help please?

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You have invested $5 million in a new product.

You learn that the sales will only be $3 million if you complete the product by spending $1 million more.

You should spend the $1 million & make the product.

True

False

What is the most you should pay to complete development?

A. $3 million

B. $5 million

C. $2.7 million

D. Nothing

Before you increase production of the potion you should...

- Listen to Harry and find the impact on gallons per worker

- Let Ron check if the cost per worker will rise or fall

- Compare the new revenue to the additional costs as Hermione proposes

A. Harry

B. Hermione

C. Ron

D. All of the above

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1 ANSWERS


  1. 1.  true...the 5 million dollars is sunk...you should ignore all sunk cost..so you should be willing to pay 1 million to make 3 million

    2.  A

    3.  B

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