Answered: this a good example of a sunk cost? Why…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Is this a good example of a sunk cost? Why or why not? “As an entrepreneur, advertising your product correctly is the most crucial thing. As I started my small business at the beginning of the year 2019, I had put around $400 in ads through Instagram and Facebook but wasn’t getting results. I had a low engagement, few clicks, and no sales during the start of my business. “

Expert Solution

Step 1

Yes, money spent on advertising and marketing is a sunk cost.

A sunk costs is a cost that you have already incurred and cannot be recovered in future.

As the money spent on advertising did not lead to increase in sales, this was a sunk cost.

This costs can not be recovered and should not be considered for making future decisions.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions