Principles of Microeconomics / Unit 6 MIC 0525 short lesson, about 20 seconds
Sunk Fixed Costs
Captions available
The idea
Many fixed costs are sunk: already paid and unrecoverable, such as last year's brand campaign. A sunk cost is a fixed cost that should not affect any decision still open.
In practice
The oven lease is owed whether the bakery opens tomorrow or not.
Where people slip
Fixed is about output; sunk is about recoverability. A fixed cost the firm could still cancel is not sunk.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Unlocks
Something wrong in this lesson? Flag it