Burgin's Broilers spent $2 million developing a new breed of chicken that tastes like alligator. However, it turns out that consumers don't care for chicken that tastes like alligator, and sales are poor. Which of the following should NOT factor into the firm's decision making?

Question

Quizplus · Accepted Answer

The $2 million in development costs is a sunk cost, meaning it has already been incurred and cannot be recovered, so it should not factor into the firm's future decision making.

Burgin's Broilers Spent $2 Million Developing a New Breed of Chicken