Which of the statements below is correct about sunk costs

A) Sunk costs are relevant to long-run decisions but not to short-run decisions.
B) Sunk costs acts as a substitute for opportunity costs.
C) Sunk costs are always relevant to decision making.
D) Sunk costs are not relevant to decision making.

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Starla Smith · Accepted Answer

Final Answer : D, Explanation :  Sunk costs are costs that have already been incurred and cannot be recovered. They should not be considered in decision making because they are irrelevant to the current or future costs and benefits associated with the decision. Only the future costs and benefits should be considered. Therefore, option D is the correct choice.

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Which of the statements below is correct about sunk costsA) Sunk costs are relevant to long-run decisions but not to short-run decisions.B) Sunk costs acts as a substitute for opportunity costs.C) Sunk costs are always relevant to decision making.D) Sunk costs are not relevant to decision making.

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