Which of the statements below is correct about sunk costs?
A) Sunk costs are always relevant to decision making.
B) Sunk costs are not relevant to decision making.
C) Sunk costs are relevant to long-run decisions but not to short-run decisions.
D) Sunk costs acts as a substitute for opportunity costs.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They should not be considered in decision making because they cannot be changed or avoided. The focus should be on future costs and benefits that can still be influenced by the decision.

Which of the Statements Below Is Correct About Sunk Costs