Final answer:
The activity cost of committed resources should be reevaluated when there is a permanent decrease in demand, focusing on future costs instead of sunk costs to make strategic business decisions.
Step-by-step explanation:
The concept of the activity cost of committed resources is highly relevant in business decisions, particularly when a company faces a permanent decrease in demand for a product or service. In this context, decision-making should shift focus from sunk costs, which are expenditures that have already occurred and cannot be recovered and therefore should not influence current decisions. Instead, the company should assess current and future costs. In such scenarios, it is essential to consider productive efficiency, which implies that it is impossible to produce more of one good or service without decreasing the quantity produced of another. Sunk costs, being irretrievable, should not influence decisions about future activities because they have no bearing on additional marginal gains, which tend to decrease as more resources are applied (diminishing returns).