When making economic decisions, the relevant costs are the _______________ (and not just the direct costs). If opportunity costs are ignored, an improper decision may result. A ____________ is a cost that has been incurred (ie spent) or committed (eg by contract or deposit) and cannot be recovered (eg $18 of the $30 that Deepak paid in Q8). In economics, sunk costs are not part of the opportunity costs of a choice and do not matter in decisions. When making decisions at the margin, the relevant benefits and costs are ____________ and not average benefits and average costs.

The ____________ is the total benefit (TB) divided by the number of units of an activity:

AB = TB quantity of units. AB and MB are not the same.

The ____________ is the total cost (TC) divided by the number of units of an activity:

AC = TC quantity of units. AC and MC are not necessarily the same. A _______ cost does not change with the amount of an activity pursued. A ________ cost varies directly with the amount of an activity pursued. A ____________ does not contribute to MC but a variable cost does.

What is the AB if you are willing to pay at up to $240 for 4 hours of massage services?

Does the 1st hour of massage produce the same benefit as the 4th hour of massage?