According to economists, which of the following should be ignored when making de

Question

According to economists, which of the following should be ignored when making decisions? Sunk costs Marginal costs Explicit costs Science If demand decreases in the short-run in a perfectly competitive market, we expect Firms will make positive profits in the short-run, and then some firms will exit Firms will make positive profits in the short-run, and then more firms will enter Firms will make negative profits in the short-run, and then some firms will exit Firms will make negative profits in the short-run, and then more firms will enter tefer to the accompanying figure. Point corresponds to the profit-maximizing quantity at which a firm in a competitive market would choose to produce

Explanation / Answer

6.

Sunk cost must be ignored when making decisions.

Answer: a

Sunk cost is the pre-incurred cost which can’t be recovered. Therefore, it has no relevance in current business decisions.

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