Question:

How are sunk costs and fixed costs related?

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a- in the long run they equal each other

b-they are not related in any way

c- sunk costs cannot be recovered and fixed costs can be avoided by shutting down

d- in the short run they are equal to each other

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  1. A fixed cost is one that is incurred regardless of activity level and is unavoidable; however, a fixed cost can be attributed to current operations.  A sunk cost is one that has been incurred, but there is no way to recover it and it no longer relates to production.  I guess I would say b.

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