Asked by Brent Markovich on Jun 14, 2024
Verified
Prospective sunk costs:
A) are relevant to economic decision-making.
B) are considered as investment decisions.
C) rise as output rises.
D) do not occur when output equals zero.
Prospective Sunk Costs
Future costs that, once incurred, cannot be recovered and should not influence current decision-making processes.
Economic Decision-Making
The process of choosing among alternatives to maximize outcomes based on objectives and constraints.
Investment Decisions
The process of choosing where to allocate resources among various options to generate returns over a certain period.
- Distinguish between sunk costs and relevant costs for decision-making.
Verified Answer
NS
Navjot SandhuJun 16, 2024
Final Answer :
A
Explanation :
Prospective sunk costs are potential future costs that are relevant to economic decision-making because they cannot be recovered and should be taken into account when making decisions about future investments or projects. The other choices are not accurate statements about prospective sunk costs.
Learning Objectives
- Distinguish between sunk costs and relevant costs for decision-making.