Sunk costs refer to
A)costs that were incurred in the past and cannot be recovered and thus should not affect current decisions.
B)all the costs that a firm must incur in the process of production.
C)the costs that change proportionately with a change in the output.
D)the quantities of a good that are given up to obtain one unit of another good.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They should not be taken into account when making current decisions since they cannot be changed. Focusing on sunk costs can lead to irrational decision-making as they are irrelevant to future costs and benefits.

Sunk Costs Refer to