Question

Sunk costs: a. should be considered, but only when marginal cost is less than marginal benefit. b. should be considered only when there is no information about marginal cost and marginal benefit. c. are essential parts of economic decisions. d. are irrelevant to economic decisions.

Answer 1

d. are irrelevant to economic decisions.

Step-by-step explanation:

Sunk cost is cost that has been incurred and cannot be recovered. They are irrelevant and should not be considered when making economic decisions.

For example, if it costs $1500 to build a store and $500 has already been spent. $500 is the sunk cost and it would not be considered in the decision to continue or abandon the project.

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