Which of the following statements is correct?
A) A firm does not need to take into account its sunk cost when making current decisions.
B) Long-run decisions are easily reversed.
C) Short-run decisions are not easily reversed.
D) In the long run, a firm can change its plant but not the quantity of its labor.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, therefore they should not be taken into account when making current decisions. 
Option B is incorrect because long-run decisions are not easily reversible as they involve significant investments and often have long-term consequences. 
Option C is also incorrect because short-run decisions are typically more easily reversible as they involve less investment and have less long-term consequences. 
Option D is incorrect because in the long run, firms can change both their plant and the quantity of labor, as they have more flexibility to adjust their resources in response to changes in demand and production needs.

Which of the Following Statements Is Correct