which of the following statements about sunk costs is true? select one: a. sunk costs are the result of past decisions. b. sunk costs are never relevant to decisions. c. sunk costs do not vary between decision alternatives. d. all of the above.

Respuesta :

The correct option is B. That's why sunk costs are never relevant to decisions.

Since sunk costs have already been incurred in the past and cannot be reversed, they are the same for all alternatives and are never relevant.  

A sunk cost, also known as a retrospective cost, is a cost that has already been incurred and cannot be recovered in economics and corporate decision-making. Sunk costs are contrasted with prospective costs, which are expenses that might be avoided in the future if action is taken.

In other terms, a sunk cost is a price that was paid in the past but is no longer significant when making decisions for the present. Even while economists contend that sunk costs are no longer relevant to future rational decision-making, consumers frequently factor past expenses in situations like fixing a car or house into their future decisions regarding those properties in daily life.

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