Sunk costs:
A)will not affect any aspect of decision making by a competitive firm in the short run.
B)are costs that can only be controlled by reducing labor input.
C)affect the shutdown price in that higher sunk costs raise the shutdown price.
D)do not affect the profit or losses of a firm.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They do not affect decision-making in the short run because they are irrelevant to future costs and revenues.

Sunk Costs