What does sunk costs mean?
Definitions for sunk costs
sunk costs
This dictionary definitions page includes all the possible meanings, example usage and translations of the word sunk costs.
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Wikipedia
sunk costs
In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken. In other words, a sunk cost is a sum paid in the past that is no longer relevant to decisions about the future. Even though economists argue that sunk costs are no longer relevant to future rational decision-making, people in everyday life often take previous expenditures in situations, such as repairing a car or house, into their future decisions regarding those properties.
Wikidata
Sunk costs
In economics and business decision-making, a sunk cost is a retrospective cost that has already been incurred and cannot be recovered. Sunk costs are sometimes contrasted with prospective costs, which are future costs that may be incurred or changed if an action is taken. Both retrospective and prospective costs may be either fixed or variable costs. Note, however, that many economists consider it a mistake to classify sunk costs as "fixed" or "variable." For example, if a firm sinks $1 million on an enterprise software installation, that cost is "sunk" because it was a one-time expense and cannot be recovered once spent. A "fixed" cost would be monthly payments made as part of a service contract or licensing deal with the company that set up the software. The upfront irretrievable payment for the installation should not be deemed a "fixed" cost, with its cost spread out over time. Sunk costs should be kept separate. The "variable costs" for this project might include data centre power usage, etc. In traditional microeconomic theory, only prospective costs are relevant to an investment decision. Traditional economics proposes that economic actors should not let sunk costs influence their decisions. Doing so would not be rationally assessing a decision exclusively on its own merits. Alternatively, a decision-maker might make rational decisions according to their own incentives, outside of efficiency or profitability. This is considered to be an incentive problem and is distinct from a sunk cost problem.
Numerology
Chaldean Numerology
The numerical value of sunk costs in Chaldean Numerology is: 9
Pythagorean Numerology
The numerical value of sunk costs in Pythagorean Numerology is: 6
Translations for sunk costs
From our Multilingual Translation Dictionary
- التكاليف الثابتةArabic
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"sunk costs." Definitions.net. STANDS4 LLC, 2024. Web. 23 Apr. 2024. <https://www.definitions.net/definition/sunk+costs>.
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