PRC-3 · Chapter 12 · Question 39 of 69
A software startup spent Rs. 5 million on a failed marketing campaign. The money is gone and cannot be recovered. When making future financial decisions, economists advise that this Rs. 5 million must be treated as a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Sunk cost to be ignored
Explanation
Sunk costs are historical expenses that cannot be recovered. Rational economic decisions should ignore sunk costs and look only at future costs and benefits.
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