Question

Should you treat your sunk cost as ______ to your short run decision making.

1) a benefit
2) a liability
3) irrelevant
4) a future investment

Answer 1

Sunk costs should be treated as irrelevant to short-run decision making because they cannot be changed or recovered.

Step-by-step explanation:

When making short-run decisions, you should treat your sunk costs as irrelevant. Sunk costs are costs that have already been incurred and cannot be recovered. They are not relevant to future decision-making because they cannot be changed or undone. Therefore, it is best to focus on the potential future benefits or liabilities of a decision rather than past costs.