Final answer:
Costs that can be eliminated by making specific choices are known as variable costs, which fluctuate based on production levels, in contrast to fixed costs that are sunk and cannot be altered.
Step-by-step explanation:
The costs that can be eliminated by making specific choices are called variable costs. Unlike fixed costs, which are incurred before any production occurs and typically do not change with the level of production, variable costs fluctuate with the firm's level of output. A firm's total revenue must exceed both fixed and variable costs to make a profit. Fixed costs are often sunk costs, meaning they have already been incurred and cannot be recovered; therefore, they should not factor into future economic decisions. On the other hand, variable costs provide information on how the firm can reduce expenses currently and how costs will change with variations in production levels. They represent potential savings if a firm adjusts production wisely.