ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A person / group of people that share their income.
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An organization that produces goods / services for sale.
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The way total income is divided among owners of various factors of production.
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Cost that’s already been incurred & can’t be recovered.
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Detailed explanation-1: -A sunk cost, sometimes called a retrospective cost, refers to an investment already incurred that can’t be recovered. Examples of sunk costs in business include marketing, research, new software installation or equipment, salaries and benefits, or facilities expenses.
Detailed explanation-2: -Sunk costs are those which have already been incurred and which are unrecoverable. In business, sunk costs are typically not included in consideration when making future decisions, as they are seen as irrelevant to current and future budgetary concerns.
Detailed explanation-3: -This tendency, which is known as the sunk cost effect, can be illustrated by the adage “throwing good money after bad.” In nature, the sunk cost effect is known as the Concorde effect.
Detailed explanation-4: -Sunk costs are historical costs which cannot be changed no matter what future action is taken. Sunk costs are easily identifiable as they will have been paid for, or are owed under a legally binding contract. Incremental costs are the changes in future costs and that will occur as a result of a decision.
Detailed explanation-5: -Marketing and advertising expenses. Research and development costs. Installation of new software systems. 06-Jan-2022