When the cost of a resource is sunk,then the dual price can be interpreted as the
A)minimum amount the firm should be willing to pay for one additional unit of the resource.
B)maximum amount the firm should be willing to pay for one additional unit of the resource.
C)minimum amount the firm should be willing to pay for multiple additional units of the resource.
D)maximum amount the firm should be willing to pay for multiple additional units of the resource.

Question

Quizplus · Accepted Answer

The dual price, in the context of a sunk cost for a resource, represents the maximum amount a firm should be willing to pay for an additional unit of that resource. This is because it reflects the additional value or benefit the firm would gain from having one more unit of the resource, taking into account that the cost of the existing resources has already been incurred and cannot be recovered.

When the Cost of a Resource Is Sunk,then the Dual