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Topic: Business
Number of pages / Number of words: 3 / 629
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A firm, which has incurred in high sunk costs, will have difficulties in deciding to exit the market even if it sees good opportunities outside. For example, pre-ordering non-refundable t-shirts, the price of the t-shirts becomes a sunk cost. Even if the shirt-buyer decides it is too cold to wear t-shirts and wants sweaters, there is no way to get back the money originally paid (Arkes 1999)...

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For example, this firm pays actual salaries to employees, the employees are accounted for and payment is definite and cost is actual. The firm has the opportunity to reduce those costs by firing HR managers that are unproductive thus the opportunities to save and minimize costs are available (Piana 2003)...

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