Distinctions Between Sunk Costs and Opportunity Costs

question 23

Essay

Distinctions between sunk costs and opportunity costs
i. Define sunk costs and opportunity costs.
ii. 'Information about sunk costs generally can be found in the accounting system; however, information about opportunity costs rarely is found in the accounting records.' Do you agree with that statement? Explain why or why not.

---

Definitions:

Persuasive

The ability to convince others to agree with a viewpoint, idea, or course of action through reasoning and argumentation.

Availability

The state of being able to be used or obtained; readiness for use.

Representativeness

A cognitive bias in decision making where the likelihood of an occurrence is evaluated based on how similar it is to stereotypes or typical cases.

Anchoring Bias

A mental shortcut in which a person gives disproportionate weight to the first piece of information they receive (known as the "anchor") during decision-making processes.