Ontel engineers proposed developing a 10-Gigahertz microprocessor in early 2011 at a cost of $20 million for a working prototype.By mid-2012,the $20 million had been spent with no prototype.The engineers request an additional $10 million to finish the project.For convenience,assume the marginal cost of producing the chip once it is developed is zero.
-In early 2011,sunk costs of this project were __________ and,in mid-2012,sunk costs were __________.
A) 0;$20 million
B) 0;$30 million
C) $20 million;$30 million
D) $20 million;$10 million
E) $20 million;0

Question

Quizplus · Accepted Answer

In early 2011, no money had been spent yet, so sunk costs were $0. By mid-2012, the $20 million had already been spent, making it a sunk cost.

Ontel Engineers Proposed Developing a 10-Gigahertz Microprocessor in Early 2011