Topic Videos
Mastering Sunk Costs - A Level and IB Economics
- Level:
- A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC, NCFE, Pearson BTEC, CIE
Last updated 28 Jan 2025
In this video, we unravel the concept of sunk costs, a critical idea in economics that impacts decision-making in businesses, markets, and even personal life. Discover how unrecoverable costs, such as investments in advertising or failed projects, influence market contestability and create barriers to entry. We’ll also explore the sunk-cost fallacy, a cognitive bias that leads to irrational decisions, and provide examples to help you identify and avoid this common pitfall.
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