An Avoidable Cost Is a Sunk Cost That Can Be

question 226

True/False

An avoidable cost is a sunk cost that can be eliminated (in whole or in part) as a result of choosing one alternative over another.

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Definitions:

Efficient Level

Efficient Level refers to the optimal amount of production or activity that maximizes benefits or utility while minimizing costs or waste.

Impose a Tax

The act of a governing body levying a financial charge or other levy upon a taxpayer, which can affect individuals, entities, or transactions.

Efficient Amount

The optimal level of production or consumption where resources are utilized in the most effective manner without waste.

External Cost

A cost of economic activity not borne by the producer or consumer, but rather by a third party or the environment, often leading to market failure.