Why Isn't a Sunk Cost Part of the Opportunity Cost

question 23

Multiple Choice

Why isn't a sunk cost part of the opportunity cost of a decision?

• A)The expense would too often outweigh the benefits.
• B)The chances of recouping a sunk cost are exceedingly small.
• C)The money is gone, regardless of the decision made.
• D)Sunk costs are psychological and thus not a part of economic costs.

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Definitions:

Lowest Terms

Refers to a fraction that is simplified to its smallest possible numerator and denominator without changing its value.

Fractions

A numerical quantity that is not a whole number, representing a part of a whole.

Mixed Numbers

Numbers made up of a whole number and a fraction, indicating a quantity that falls between two consecutive integers.

Lowest Terms

refers to the simplest form of a fraction, where the numerator and denominator are as small as possible and share no common divisors other than 1.