Sunk costs affect the shutdown price in that higher sunk costs raise the shutdown price.

Name: Sunk costs affect the shutdown price in that higher sunk costs raise the shutdown price.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, and therefore should not affect decision-making about future operations, including the decision to shut down. Shutdown price is determined by variable costs and revenue, not sunk costs.

Sunk Costs Affect the Shutdown Price in That Higher Sunk