A firm built an inventory of 16-bit chips for $50,000 last year.However,the introduction of 32-bit chips lowers the market price for 16-bit chips and the inventory can only be sold for $40,000 now.What is the sunk cost?
A)$50,000
B)$40,000
C)$10,000
D)$90,000

Question

Quizplus · Accepted Answer

Sunk cost is a cost that has already been incurred and cannot be recovered. In this case, the firm has already spent $50,000 on the inventory, so the sunk cost is $50,000.

A Firm Built an Inventory of 16-Bit Chips for $50,000