You have just purchased a car for $20,000 and realized that you still have to pay for insurance,licence,parking and gasoline.The $20,000 spent on the car represents
A) sunk cost.
B) opportunity cost.
C) marginal cost.
D) average cost.
E) total costs.

Question

Quizplus · Accepted Answer

The cost of purchasing the car is a sunk cost, meaning that it is a cost that has already been spent and cannot be recovered. The other expenses listed (insurance, license, parking, and gasoline) are ongoing costs and would not fall under the category of sunk costs.

You Have Just Purchased a Car for $20,000 and Realized