Sunk Costs Are

question 133

Multiple Choice

Sunk costs are:

• A) Substitutes for opportunity costs.
• B) Not relevant for decision making.
• C) By definition, relevant to decision making.
• D) Approximations to economic costs.
• E) Relevant to long-run, but generally not to short-run, decisions.

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Definitions:

Upstream Price Discrimination

Differential pricing strategy employed before the product reaches the final consumer, often involving wholesalers or distributors.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to profit from unequal prices.

Vertical Contracts

Agreements between firms at different levels in the supply chain, such as between a manufacturer and a retailer, to control the terms of sale or distribution.

Upstream Price Discrimination

A pricing strategy where producers or wholesalers charge different prices to retailers or distributors, often based on the amount being purchased or the bargaining power of the buyer.