Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 13

Trump Airlines is thinking of buying a new plane for its shuttle service. Why does the economist's notion of cost suggest that Trump should consider the plane's price in deciding whether it is a profitable investment but that, once bought, the plane's price is not directly relevant to Trump's profit-maximizing decisions? In such a case of "sunk costs," which cost should be used for deciding where to use the plane?