Which of the following statements is true?
A) Neither sunk costs nor the sinking of a cost will affect a decision maker's best choice
B) Both sunk costs and the sinking of a cost will affect a decision maker's best choice
C) Sunk costs will affect a decision maker's best choice, but the sinking of a cost will not
D) Sunk costs will not affect a decision maker's best choice, but the sinking of a cost will affect their choice

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, and should not be considered in decision making. The sinking of a cost refers to an ongoing cost that is expected to continue into the future. Such costs should be considered in decision making as they will affect future cash flows. Therefore, option D is the correct answer as sunk costs will not affect a decision maker's best choice, but the sinking of a cost will affect their choice.

Which of the Following Statements Is True