Only marginal costs, not sunk costs, affect economic decisions if individuals are rational.
Answer the following statement true (T) or false (F)
True
Sunk costs are costs that have already been incurred and cannot be recovered no matter what action is taken. Marginal costs represent the additional costs associated with undertaking an economic activity, and an individual must balance these costs against the marginal benefit from the activity to make a rational choice.
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If the market in the figure above is a profit-maximizing single-price monopoly, consumer surplus is the area ________
A) ABH B) BFGH C) ACG D) BCD E) ACE
For me to stop getting speeding tickets for a year, I gave five friends devices that measure my driving speed. If I drove over the speed limit by more than 5 miles per hour, I would have to pay them each $1,000. This would be an example of:
A. sunk costs. B. a precommitment strategy. C. opportunity costs. D. a deductive decision.
Which of the following is not a weakness of fiscal policy?
What will be an ideal response?
How does human specialization contribute towards increasing an economy's output?
A. It exploits the differences in abilities B. It is a process of creative destruction C. It pushes each worker to master the whole product D. It encourages people to be "jacks-of-all-trades"