Question

According to behavioral​ economics, consumers A. do not always behave rationally because they ignore sunk costs. B. always behave rationally because they take into account monetary costs and nonmonetary opportunity costs. C. do not always behave rationally because they fail to ignore sunk costs . D. always behave rationally because they are overly optimistic about their future behavior. E. do not always behave rationally because they take into account nonmonetary opportunity costs.

Answer 1

A. do not always behave rationally because they ignore sunk costs.

Step-by-step explanation:

Behavioral economics can be defined as a branch of economics that typically deals with the study of market transactions in which consumers of goods and services make choices or buying decisions that doesn't look economically rational.

According to behavioral​ economics, consumers do not always behave rationally because they ignore sunk costs i.e being overly optimistic about their behavior in the future while ignoring the fact that the money has been spent on purchase and cannot be recovered again.

Sunk cost can be defined as a cost or an amount of money that has been spent on something in the past and as such cannot be recovered. Thus, because a sunk cost has been incurred by an individual or organization it can't be recovered and as such it is irrelevant in the decision-making process such as investments, projects etc.

Basically, sunk costs are referred to as fixed costs.