When making choices, suppliers should not allow sunk costs to directly affect their current decisions because
A) sunk costs do not reflect foregone opportunities accompanying current choices.
B) sunk costs will not influence the accounting costs of a firm.
C) sunk costs influence the demand for products, not the supply.
D) past choices fail to provide any information relevant to current decision making.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They do not reflect current or future opportunities, so they should not influence current decision-making.

When Making Choices, Suppliers Should Not Allow Sunk Costs to Directly