Sunk costs:

Question

Sunk costs:

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They are not relevant to future decision-making because they cannot be changed. However, they do affect economic profit, which takes into account all costs, including sunk costs. Therefore, option A is the correct choice. Option B is incorrect because sunk costs are not just associated with failed business ventures, but with any costs that have already been incurred. Option C is partially correct because sunk costs are not important in marginal analysis, but the primary focus of marginal analysis is on marginal costs, which are not the same as sunk costs (option D).

Sunk Costs