This preview shows page 1. Sign up to view the full content.
Unformatted text preview: leading to maximum net revenues. Money that has already been spent, cost that have already been incurred are referred to as sunk costs. Sunk costs are not relevant for making future decisions. Only the costs in which we still have control are relevant for future decision making. The $2.50 per bushel is gone. The corn is worth $3.50 per bushel in my hand. Do I sell it for $3.50 per bushel, or do I use it as an input in the swine operation to enhance profits? If I sell the corn, I make $1.00 per bushel. If I feed the corn to hogs, will I earn more or less than $1.00 per bushel? That is the logic behind this analysis....
View Full Document
This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10
- Opportunity Cost