Unsourced material may be challenged and removed. However, many economists consider it a mistake to bernheim and whinston microeconomics pdf sunk costs as “fixed” or “variable. 400 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. Sunk costs should be kept separate. The “variable costs” for this project might include data centre power usage, for example. Traditional economics proposes that economic actors should not let sunk costs influence their decisions.
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