How Are Sunk Costs and Fixed Costs Related

question 42

Multiple Choice

How are sunk costs and fixed costs related?

• A)They are not related in any way.
• B)Sunk costs cannot be recovered and fixed costs can be avoided by shutting down.
• C)In the short run they are equal to each other.
• D)In the long run they are equal to each other.

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Definitions:

Futures Price

The agreed price for the future delivery of an asset in a futures contract market.

Spot Exchange Rate

The current exchange rate at which one currency can be traded for another immediately.

Arbitrage

The strategy of exploiting price differences of identical or similar financial instruments across different markets to gain profit with minimal risk.