Suppose that you join a gym that charges a $250 membership fee.You also have to pay an additional $5 each time you go the gym.In this case,your sunk cost is
A) $250
B) Dependent upon the number of time you go to the gym
C) $5
D) $250 plus $5 times every visit you make to the gym

Question

Quizplus · Accepted Answer

The sunk cost is the initial membership fee of $250, as it is a one-time expense that cannot be recovered regardless of how often the gym is visited. The additional $5 fee for each visit is not a sunk cost because it is incurred each time the gym is visited, and thus can be avoided by choosing not to go to the gym.

Suppose That You Join a Gym That Charges a $250