Why Is a Sunk Cost Not Part of the Opportunity

question 47

Multiple Choice

Why is a sunk cost not part of the opportunity cost of a decision?

• A) Because the expense would too often outweigh the benefits.
• B) Because the chances of recouping it are infinitesimally small.
• C) Because the money is gone, regardless of the decision made.
• D) Sunk costs are a part of the opportunity cost of a decision.

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Definitions:

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The process by which businesses alter their production levels or inputs in response to short-term changes in market conditions.

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An economic sector involved in the production, distribution, and recycling of plastic materials and products.

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The excess of total revenues over the total costs (including both explicit and implicit costs) of a business.