A Cost That Has Already Been Incurred and Is Irrelevant

question 55

Multiple Choice

A cost that has already been incurred and is irrelevant to the decision-making process is a(n)

• A) opportunity cost.
• B) replacement cost.
• C) outlay cost.
• D) sunk cost.

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Definitions:

Consumer Surplus

The discrepancy between what consumers are prepared to spend on a good or service and what they end up paying.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from trading goods and services.

Tariffs

Taxes imposed by a government on imported goods and services to control trade volumes, protect domestic industries, or generate revenue.

Quotas

Limits set by governments on the quantity of a good that can be imported or exported within a certain time period to regulate trade.