Before entering,fixed cost associated with the industry in question are sunk costs for
A) the incumbent firm.
B) the outside firm.
C) both firms.
D) neither firm.

Question

Quizplus · Accepted Answer

Sunk costs are costs that cannot be recovered once they have been paid, and thus do not affect the current decision-making process. Therefore, as the incumbent firm has already paid the fixed costs associated with the industry, they can be considered sunk costs for them.

Before Entering,fixed Cost Associated with the Industry in Question Are