Question

Good Earth, a company manufacturing packaged food products, sets up its stores in Baltonia. However, a year later, the company closes the store down due to high operating costs. In such a scenario, the money spent in paying for the rent of the store in Baltonia would be an example of _____ costs.

Answer 1

sunk costs

Step-by-step explanation:

Based on the information provided within the question it can be said that this money spent would be considered an example of sunk costs. In the context of economics, this term refers to a cost that has already been spent and can no longer be recovered. Which in this case since they already purchased the store, they can no longer recover the money that they put into it.