Sunk Costs

question 18

Multiple Choice

Sunk costs:

• A)Have already been incurred as a result of past actions.
• B)Vary among the alternative courses of action being considered.
• C)Are benefits that could have been obtained by following another course of action.
• D)Result from unfavorable cost variances.

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Definitions:

Labor

The application of human physical and intellectual labor in the creation of goods and services.

Capital Equipment

Long-term assets acquired or used by a business for the production of goods and services, such as machinery, buildings, and vehicles.

Market Price

The current price at which an asset or service can be bought or sold in a given market, determined by supply and demand.

Equilibrium Quantity

The amount of a good or service that is supplied and demanded at the equilibrium market price.