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Mastering Sunk Costs - A Level and IB Economics

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, NCFE, OCR, Pearson BTEC, WJEC

Last updated 28 Jan 2025

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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.

Mastering Sunk Costs - A Level and IB Economics
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