A sunk cost:
A) causes a decision maker to choose to pursue less of an activity.
B) causes a decision maker to choose to pursue more of an activity.
C) increases the marginal cost of an activity.
D) has no effect on a decision maker's best choice.

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered. Therefore, it should not affect a decision maker's best choice going forward. The decision should be based on the marginal costs and benefits of the options available, regardless of any sunk costs.

A Sunk Cost