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Two partners who own Progressive Business Solutions, which
currently operates out of an office in a small town near Boston,
just discovered a vacancy in an office building in downtown Boston.
One of the partners favors moving downtown because she believes the
additional business gained by moving downtown will exceed the
higher rent at the downtown location plus the cost of making the
move. The other partner at PBS opposes moving downtown. He argues,
“We have already paid for the office stationery, business cards,
and a large sign that cannot be moved or sold. We have spent so
much on our current office that we can’t afford to waste this money
by moving now.” Evaluate the second partner’s advice not to move
downtown. Illustrate and fully explain using an example of relevant
cost (a cost whose value does affect the optimal decision) and an
example of irrelevant cost (a cost whose value does not affect the
optimal decision) to the business regarding this decision.


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