Asked by Priyani Patel on May 25, 2024
Verified
Sunk costs:
A) can only be measured in monetary terms.
B) are opportunity costs.
C) should influence a person's choice if that person is a marginal decision maker.
D) lower the efficiency of production.
E) should not be considered when making economic decisions.
Sunk Costs
Costs that have already been incurred and cannot be recovered, which should not influence future business decisions.
Economic Decisions
Choices made by individuals, firms, or governments regarding the allocation of resources to satisfy needs and wants.
Marginal Decision Maker
is an individual or entity that makes choices based on the additional cost or benefit of the next unit of consumption or production.
- Grasp the concept of sunk costs and their irrelevance to future economic decisions.
Verified Answer
CA
Cinthya ArenasMay 27, 2024
Final Answer :
E
Explanation :
Sunk costs are costs that have already been incurred and cannot be recovered. They should not influence future economic decisions because they cannot be changed by any decision made now.
Learning Objectives
- Grasp the concept of sunk costs and their irrelevance to future economic decisions.