You spent €500 last week ﬁxing the transmission in your car.Now, the brakes are acting up and you are trying to decide whether to ﬁx them or trade the car in for a newer model.In analyzing the brake
Situation, the €500 you spent ﬁxing the transmission is a(n) _____ cost.

Question

Quizplus · Accepted Answer

The €500 spent on fixing the transmission is a sunk cost, meaning it cannot be recouped regardless of the decision to fix the brakes or trade in the car. Therefore, it should not be a factor in the decision-making process. The decision should be based solely on the cost of fixing the brakes versus the cost of trading in for a newer model.

You Spent €500 Last Week ﬁXing the Transmission in Your