Asked by Ashley Pillatos on Jun 12, 2024
Verified
The manager of a firm operating in a competitive market can ignore sunk costs when making business decisions.
Sunk Costs
Expenses that have been incurred and cannot be recovered, regardless of future actions.
Competitive Market
A market structure where many buyers and sellers exchange homogeneous products and no single participant has the power to significantly influence the price of the product.
- Clarify the function of opportunity costs, sunk costs, and fixed costs in the decision-making process and financial success of companies.
Verified Answer
AE
aning edward stephenJun 14, 2024
Final Answer :
True
Explanation :
Sunk costs are past costs that have already been incurred and cannot be recovered, so they should not affect the manager's current and future business decisions.
Learning Objectives
- Clarify the function of opportunity costs, sunk costs, and fixed costs in the decision-making process and financial success of companies.
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