Question

question 16 · 1 point tim has decided on a budget of no more than $20 to spend at the casino. after the first few rounds at the slot machines, he wins $100. now, he decides to use all his winnings to continue playing. select the correct answer below: for tim dollars are fungible. this is an example of mental accounting. this shows that tim is loss averse. all of the above feedback content attribution question 17 · 1 point which of the following is not an example of an accounting or explicit cost for a startup company? select the correct answer below: rent cost of electricity managers salary interest rate forgone by not investing the startup money

Explanation:

Question 16

Mental accounting is the process of categorizing money in one's mind. Tim had a budget of $20 but then treated his $100 - win as a separate 'account' to continue playing, which is a sign of mental accounting. Fungibility means money is interchangeable, and there's no indication Tim sees his money this way. Also, there's no sign of loss - aversion (fear of losing) here as he is using his winnings freely.

Accounting or explicit costs are out - of - pocket expenses. Rent, cost of electricity, and manager's salary are all direct payments made by the company. The interest rate forgone by not investing the startup money is an implicit cost (opportunity cost), not an explicit cost.

Answer:

This is an example of mental accounting.

Question 17