What does the Skunk Cost principle state?

• A. Don't consider money already spent
• B. Always consider sunk costs in decision making
• C. Focus only on future costs
• D. Sunk costs should be expended to continue

Answer: (A)

Ignore money already spent when making a decision. Sunk costs are unrecoverable, so they shouldn’t influence whether you continue a project or stop. What matters is the future costs and benefits from moving forward. If the expected future benefits exceed the future costs, proceed; if not, discontinue, even if a lot has already been spent. This helps avoid the sunk-cost trap, where past investments push you to keep chasing a losing option.