What does it mean to understand sunk costs for business decisions?

And the best way to avoid this trap is to ask yourself: what kind of investment decision would you make if you didn't have this **or** in hand, or if you were given another sum of money, and if the answer was no, then it was better to sell it. You can't just make a "mistake on top of wrong" decision just because you have already lived in it, for the so-called "amortization of costs" on the psychological account.

The same is true for a**or a**, if it has made you lose too much, and there is no sign of improvement in the fundamentals in the short term, then instead of blindly adding, in exchange for an indefinite period of hope, it is better to cut through the mess quickly, accept the sunk cost, re-select the target, and start a new investment experience. <>

The reason is because in the hearts of many people, there is a virtual "psychological account", which includes the profit part in the profit, and believes that the profit should be in the pocket in time; And once the loss ** is sold, it becomes the loss of real gold**. Unwilling to face losses, unwilling to admit failures in their investment decisions, and implementing "ostrich" strategies in the face of losses, the ensuing results may be even worse. Just like the common phenomenon of staggering in life, seeing that the service staff of this team is very inefficient, and may even stop serving at any time, but because they have invested a lot of time before, they do not have the courage to start a new line to line up, which seems to be in order not to turn the previous investment into a loss, but in fact may have lost more time.

Soros's view of sunk costs is worth learning from: "I don't think this approach can recoup the damage. ”<

Summary. Enterprises should look at the precipitation cost rationally when making management decisions, and in some cases, the precipitation cost should be ignored. The precipitation cost has been invested and cannot be changed, and the management decision at this time should look at the present and the future, and do not be stumped by the precipitation cost.

How should precipitation costs be treated in the operation and management decisions of enterprises? Why?

Enterprises should look at the precipitation cost rationally when making management decisions, and in some cases, the precipitation cost should be ignored. The precipitation cost has been invested and cannot be changed, and the management decision at this time should look at the present and the future, and do not be stumped by the precipitation cost.

What are the main externalities of transportation costs?

Hello. The positive externalities of the transport industry are that it provides considerable economic and social benefits to society, and the benefits of the transport industry far outweigh the costs paid directly or indirectly by people for transport activities. The negative externalities of the transportation industry are mainly reflected in four aspects: noise pollution, air pollution, traffic congestion and traffic accidents.

What are the ways to control the externalities of transportation costs.

1) Direct regulation (2) Emission charges (taxes internalize externality; Pigou Tax) (3) Mandatory use of low-polluting vehicles to read materials.

Summary. Hello, sunk cost refers to the cost that has been incurred in the manufacturing and sales process of a product or service but can not be fully utilized, that is, once the manufacturing and sales process has begun, it cannot be terminated or ** expense, when making business decisions, sunk costs should be considered, because the cost will affect the results of business decisions, for example, when a company develops a new product, it will generally invest a lot of time and money, at this time, if the product can not get enough sales, The company generally bears the loss of sunk costs, that is, this part of the invested funds cannot be fully utilized.

What are sunk costs? How do you think about sunk costs when making business decisions? It also provides examples of possible scenarios in which sunk costs can influence business decisions.

Hello, sunk cost refers to the cost that has been incurred in the manufacturing and sales process of a product or service but can not be fully utilized, that is, once the manufacturing and sales process has been skillfully started, it can not be terminated or ** expense, when making business decisions, the sunk cost should be considered, because the cost will affect the results of business decisions, for example, a company will generally invest a lot of time and money in the development of a new product, at this time, if the product can not get enough sales, The company generally has to bear the loss of sunk costs, that is, this part of the invested funds cannot be fully utilized.

In a related extension, Li added that commerce is an economic activity that enables the circulation of commodities by way of buying and selling, and also refers to the sector of the national economy that organizes the circulation of commodities. Industry and commerce are the mainstream and leading force of the city, and advanced and developed commerce is the symbol of the developed economy of the modern city. Commerce arose in the Shang Kingdom during the pre-Shang period, and was a social activity carried out in the form of barter in the early stage.