Explain the concept of sunk costs with an example
Sunk costs are costs that were incurred in the past and cannot be recovered. Suppose Edgar pays $8 to see a movie. He watches the film for 30 minutes after which he leaves. Thus, the money he spent is a sunk cost since Edgar will not get a refund. The lesson of sunk costs is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.
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The slope of the per person production function is
A) the marginal product of labor. B) the marginal product of capital. C) lower for a poor country than for a rich country. D) higher for a rich country than for a poor country.
The idea of opportunity cost suggests that the cost of a particular choice should be measured by the
a. price of the good chosen b. price of the good divided by income c. value of the best alternative sacrificed d. amount of the good consumed e. sum of the costs of all foregone opportunities
In recent years, the number of private, for profit, _________________ has increased dramatically.
Fill in the blank(s) with the appropriate word(s).
The business cycle may hamper economic growth because it creates additional ________ for business owners.
A. unemployment B. stability C. risks D. inflation