Question

Please help with the following problems. Thanks so much

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You pay $100 for a ticket to a basketball game. After three quarters, the visiting team has a 30-point lead Although the game is now hopeless, in order to get your money's worth, you decide to stay for the remainder of the game. True or False: This is an example of the fixed-cost fallacy. True False

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Answer 1

Question 1

Fixed-cost fallacy states that even though a cost that has been incurred cannot be recovered then also a person makes future decisions on the basis of such cost even though such cost would not have any bearing on the future outcome.

In the given case, we have paid $100 for tickets and attended the game.

The money spent on tickets cannot be recovered.

As money cannot be recovered, it is imprudent to base our decision to leave the game on recovery of such cost.

Thus, the given scenario is an example of the fixed cost fallacy.

Hence, the given statement is True.