Which of the Following Is the Best Definition for Sunk

question 176

Multiple Choice

Which of the following is the best definition for sunk cost?

• A) Depreciation method under Canadian tax law allowing for the accelerated write-off of property under various classifications.
• B) A cost that has already been incurred and cannot be removed and therefore should not be considered in an investment decision.
• C) Evaluation of a project based on the project's incremental cash flows.
• D) Financial statements projecting future years' operations.
• E) The most valuable alternative that is given up if a particular investment is undertaken.

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Definitions:

Purely Competitive Industry

An industry characterized by many small firms producing identical products where no single firm can influence the market price.

Consumer Demand

The desire and willingness of consumers to purchase goods and services at given prices.

Increasing-Cost Industry

An industry in which production costs increase as output expands, often due to limited resources or rising input costs.

Decline In Demand

A situation where consumers' desire and ability to purchase a product or service decreases, often reflected in lower sales volumes.