Money That the Firm Has Already Spent or Is Committed

question 28

Multiple Choice

Money that the firm has already spent or is committed to spend regardless of whether a project is taken is called a(n) :

• A) sunk cost.
• B) opportunity cost.
• C) erosion.
• D) fixed cost.

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of output varies with the level of production.

Marginal Revenue Curve

A visual representation that shows the additional revenue generated by selling one more unit of a good or service.

Collude

To engage in a secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.

Perfectly Competitive

A market structure characterized by many buyers and sellers, freedom of entry and exit, homogeneous products, and perfect information.