Sunk costs are costs that have already been incurred as a result of past decisions and cannot be recovered. They should not be taken into consideration when making decisions about future production or investments because they are irrelevant to the current decision.

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Sunk Costs

Question 89

Multiple Choice

Sunk costs:

A) should be taken into consideration when making decisions about future production.
B) are costs that have been incurred as a result of past decisions.
C) cause the profit-maximizing rule to no longer be useful.
D) are future costs that you have to incur.
E) are included only in economic profits.

Correct Answer: