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.
A) opportunity
B) fixed
C) incremental
D) sunk

Question

Quizplus · Accepted Answer

The $500 spent on fixing the transmission is a sunk cost because it has already been incurred and cannot be recovered, regardless of future actions.

You Spent $500 Last Week Fixing the Transmission in Your