What you’ll learn to do: identify sunk costs

It’s obvious that a firm’s total revenue must exceed total costs if it wants to make a profit. But in this section, you’ll see why it’s helpful for firms to break down their costs to examine various types of costs—fixed cost, marginal cost, average total cost, average variable costs, and sunk costs to get a better picture of how they can become more profitable.

LEARNING ACTIVITIES

The learning activities for this section include:

• Reading: Sunk Costs and Alternative Measures of Costs
• Self Check: Sunk Costs

Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.