Explain why sunk costs are irrelevant to choosing the best amount of an activity.
What will be an ideal response?
The best amount of an activity occurs where MC = MB. Because sunk costs are not related the level of the activity, they have no impact on MC. Since MC doesn't change in the face of a sunk cost, the best choice will not change.
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The more restrictive affirmative action programs are,
A) the greater the likelihood of the economic pie shrinking. B) the lower the administrative costs of administering the program. C) the larger the wage gap tends to get. D) the greater the amount of labor market discrimination.
The bonds held in the Social Security Trust Fund
a. are a valuable asset of the federal government. b. will generate a future stream of net income for the federal government. c. are an IOU from one government agency (the U.S. Treasury) to another (the Social Security Administration). d. are necessary to provide retirement benefits for future retirees.