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Question
The city of Tustin, California, has spent $10 million on a project to build a new community college. It will cost the city $40 million to finish the project. When making the decision to continue the project, the citys chief economist tells the city council to ignore the $10 million because
a. the $10 million is a sunk cost.
b. the $10 million doesnt factor into the total cost of the project.
c. $10 million is only one-fifth of the entire project cost.
d. the $10 million is a variable cost.
e. the $10 million can be recovered if the project is stopped.
Answer
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