Question

Brianna has just started her degree at Carleton and because she is a superstar and has the time management skills, she will be working part-time while studying. She now only has to decide between 2 jobs: Both Job A and Job B offer a salary of $1673 per semester. Job A offers $85 commission per sale made versus Job B which offers $52 per additional hour she works over 14 hours a week. Her tuition, which she already paid and cannot get back, is $6975. She lives on her own and pays rent of $2937 per semester. Which of the following best classifies the costs above:

Select one:

a. The rent of $2937 and tuition of $6975 that Brianna is paying are both opportunity costs; she could have found a lower price.

b. The $85 commission and $52 wage per hour are sunk costs in deciding between jobs. Her tuition of $6975, since it cannot be changed, is a relevant cost.

c. The salary of $1673 is a relevant cost and her rent of $2937, because it cannot be changed, is an opportunity cost.

d. The $85 commission and $52 wage per hour are relevant costs in deciding between jobs. Her tuition of $6975, since it cannot be changed, is a sunk cost.

Answer 1

The correct answer is

D. The commission and wage per hour are relevant costs since different. The tuition is a sunk cost as it has already been paid

Rent and fixed salary are irrelevant costs since same between alternatives.