Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 5 Firm Behavior and the Organization of Industry
Chapter 14 of 36 - Firms In Competitive Markets
Section 12 of 22
…
Economists say a cost is a “sunk cost” when it is committed and cannot be recovered.
Because nothing can be done about sunk costs a firm can ignore them when making decisions.
A firm cannot recover its fixed costs by temporarily stopping production.
Regardless of the quantity of output supplied, even if zero, the firm still has to pay its fixed costs.
As a result, fixed costs are sunk in the short run and are ignored when deciding how much to produce.
…
Consider you place a $15 value on seeing a newly released movie, you would pay up to $15 to see it.
You buy a ticket for $10, but you lose the ticket before entering the theater.
Should you buy another ticket?
Should you go home and refuse to pay a total of $20 to see the movie?
The answer is you should buy another ticket.
The $15 benefit of seeing the movie still exceeds the $10 opportunity cost for the second ticket.
The first $10 you paid for the lost ticket is a sunk cost.
Since you value seeing the movie at $15 you will only lose $5.
… …
sunk costs and fixed costs
maibotsu hi to kotei hi
埋没費と固定費

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