Sunk Cost
Sunk cost is an economic term that refers to costs that have already been incurred and cannot be recovered. It is a cost that has already been paid and cannot be recovered. Sunk costs are also known as past costs, committed costs, or irreversible costs. Sunk costs are not taken into consideration when making decisions about the future because they cannot be changed and are not relevant to the decision-making process.
History of Sunk Cost
The concept of sunk cost was first introduced by economist John Maynard Keynes in his 1936 book, The General Theory of Employment, Interest, and Money. Keynes argued that sunk costs should not be taken into consideration when making decisions about the future because they are not relevant to the decision-making process. The concept of sunk cost has since been widely accepted and is used in many areas of economics, including business, finance, and accounting.
Comparison Table
| Cost Type | Recoverable |
|---|---|
| Sunk Cost | No |
| Opportunity Cost | Yes |
| Fixed Cost | No |
| Variable Cost | Yes |
Summary
Sunk cost is an economic term that refers to costs that have already been incurred and cannot be recovered. It is a cost that has already been paid and cannot be recovered. Sunk costs are not taken into consideration when making decisions about the future because they cannot be changed and are not relevant to the decision-making process. For more information about sunk cost, you can visit websites such as Investopedia, The Balance, and Investing Answers.
See Also
- Opportunity Cost
- Fixed Cost
- Variable Cost
- Marginal Cost
- Average Cost
- Total Cost
- Incremental Cost
- Average Variable Cost
- Average Fixed Cost
- Average Total Cost
