The useful idea
- The useful idea
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.
- How it works
Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken.
- Why it matters
In other words, a sunk cost is a sum paid in the past that should no longer be relevant to decisions about the future.
Why this matters
Use Sunk cost to compare the trade-offs before committing money.
Try this
Use Sunk cost to compare the trade-offs before committing money.
Test your recall
Which idea belongs to the explanation of Sunk cost?
- Why it matters
- How it works
- The useful idea — correct
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.
General education only — not personal financial advice.