Buck is an accounting major. After completing 75% of the required more credits toward an accounting...

Buck is an accounting major. After completing 75% of the required more credits toward an accounting degree, Buck decided that couldn’t spend his career stuck in an office, and wanted to become a Police Officer. Buck however, remembered the lessons on marginal analysis and sunk cost from his macroeconomics class and decided to complete his accounting degree.

Explain how Buck could have arrived at this decision.

Expert Solution

Buck decided to complete the accounting degree, because he performed marginal analysis and evaluated sunk cost incurred. Buck identified that sunk cost incurred in pursuing education in terms of fees, books and other cost already spent, cannot be recovered if he goes for the another career option. Hence, all the cost involved in pursuing accounting course, will be lost, if going for the another career option. So, it is wise to stick with the accounting course.

Now, there are only 25% credit left for the accounting course. It means that marginal cost to complete the course of accounting is less, while completing a course of accounting and getting benefits ( marginal benefit) is huge and for whole life. When it is compared with another career, then huge costs are involved, first, then benefits will be evaluated. Hence, pursuing the course of accounting is going to happen at lower marginal cost and bigger marginal benefits. So, Buck decided to go for the accounting course due to lower marginal cost and bigger marginal benefit.

Rahul Sunny answered 7 months ago

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