AJ plans to attend a retreat on mindfulness. He paid a $500 nonrefundable registration fee, made a reservation at a hotel that costs $200, and budgeted $150 for gas and food. Two days before the retreat, he becomes ill. Assuming he is able to cancel the hotel without penalty, AJ's sunk cost equals

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. In this scenario, the only sunk cost is the $500 nonrefundable registration fee. The hotel reservation can be canceled without penalty, and the money for gas and food has not been spent yet.

AJ Plans to Attend a Retreat on Mindfulness