Which is the best example of a sunk cost of production to a firm?
A) Rent on the factory.
B) Wages paid to production workers.
C) Electricity charges.
D) Cost of production materials.
E) Transportation costs.

Question

Quizplus · Accepted Answer

Rent on the factory is a sunk cost because it has already been paid and cannot be recovered even if the firm decides to stop production. Wages, electricity charges, cost of production materials, and transportation costs are all variable costs that can be reduced or eliminated if the firm decides to stop production.

Which Is the Best Example of a Sunk Cost of Production