Which of the following statements is incorrect?
A) Fixed costs do not vary with output.
B) Sunk costs are those costs that are forever lost after they have been paid.
C) Fixed costs are always greater than sunk costs.
D) Fixed costs could be positive when sunk costs are zero.

Question

Quizplus · Accepted Answer

Fixed costs and sunk costs are two different concepts, and one cannot be greater or less than the other. Sunk costs are costs that have already been incurred and cannot be recovered, whereas fixed costs refer to costs that do not vary with the level of output. It is possible for fixed costs to be positive even when sunk costs are zero.

Which of the Following Statements Is Incorrect