Sunk Costs

question 68

Multiple Choice

Sunk costs

• A) are expenditures made in the past that cannot be regained no matter what is done now or in the future.
• B) are a component of variable costs, but not fixed costs.
• C) represent foregone opportunities, and therefore the firm's managers should consider these costs when they are making current decisions.
• D) can be avoided if the firm goes out of business.

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Definitions:

Marginal Cost

The cost associated with producing one additional unit of output, focusing on how total production costs change with production volume adjustments.

Carbon Tax

A financial charge imposed on greenhouse gas emissions, aimed at reducing carbon dioxide emissions and combating climate change.

Aggregate Demand

The total demand for all goods and services within an economy at a given overall price level and in a given time period.

Pollution Tax

A tax imposed by governments on emissions generated by businesses and industries, aimed at reducing environmental damage.