Question

Provide an example of a sunk cost. How does this differ from a marginal cost? Explain...

Provide an example of a sunk cost. How does this differ from a marginal cost? Explain a time you did (or should have) used marginal analysis to solve a problem

Homework Answers

Answer #1

The sunk cost is the cost that has been occurred and would never recover. Suppose you have brought a ticket for a movie and couldn't go. Whether you go or not the cost is incurred.

Marginal cost is the cost incurred with an additional unit. Sunk cost differ from Marginal cost in the sense that the former is changing with the additional unit and the latter is one time occurred.

Marginal analysis is used in daily life, say in the factory, whether the extra worker would add to the productivity of the work or not.

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