Sunk costs are the result of past decisions; therefore, they are always relevant to future decisions. Select one: True False<\/p>\n\n\n\n
The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n Correct Answer: False<\/strong><\/p>\n\n\n\n Explanation:<\/strong><\/p>\n\n\n\n Sunk costs are not<\/strong> relevant to future decisions because they represent costs that have already been incurred and cannot be recovered, regardless of the future course of action. In decision-making, only relevant costs<\/strong>\u2014those that will be affected by the decision at hand\u2014should be considered. Since sunk costs are in the past and cannot be changed, they should be ignored when evaluating future options.<\/p>\n\n\n\n For example, imagine a company has spent $50,000 developing a product that turns out to be unprofitable. Whether the company continues to invest in the product or discontinues it, the $50,000 is already spent. That money is a sunk cost and should not influence the decision. Instead, the company should focus on marginal costs and benefits<\/strong>\u2014how much more it will cost to continue, and what the potential gains are.<\/p>\n\n\n\n Continuing to factor in sunk costs leads to what’s known as the sunk cost fallacy<\/strong>\u2014a common cognitive bias where people continue a project or decision based on the amount already invested, rather than on its current and future value. For instance, someone might continue watching a bad movie just because they paid for the ticket, even though leaving would better use their time.<\/p>\n\n\n\n Economists and managers are trained to disregard sunk costs to make more rational, profit-maximizing choices. In summary, sunk costs are the result of past decisions<\/strong>, but they are not relevant<\/strong> to future decisions because they do not change no matter what action is taken. Therefore, the correct answer is False<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":" Sunk costs are the result of past decisions; therefore, they are always relevant to future decisions. Select one: True False The correct answer and explanation is: Correct Answer: False Explanation: Sunk costs are not relevant to future decisions because they represent costs that have already been incurred and cannot be recovered, regardless of the future […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-22496","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=22496"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22496\/revisions"}],"predecessor-version":[{"id":22497,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22496\/revisions\/22497"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=22496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=22496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=22496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}