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Simple English definitions for legal terms
sunk cost
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A quick definition of sunk cost:
Sunk cost is money that has already been spent and cannot be recovered. It's like buying a toy and then realizing you don't like it, but you can't get your money back. The money you spent on the toy is a sunk cost. It's important to remember that sunk costs should not affect future decisions because the money is already gone.
A more thorough explanation:
Definition: A cost that has already been incurred and cannot be recovered.
Examples:
- Money spent on a non-refundable concert ticket that you cannot attend.
- Investment in a failing business that cannot be recouped.
- Time and resources spent on a project that is ultimately abandoned.
These examples illustrate the concept of sunk cost because the money, investment, and time spent cannot be recovered, regardless of the outcome. It is important to recognize sunk costs and not let them influence future decisions, as they are no longer relevant to the current situation.