Final answer:
Avoidable costs are those that can be eliminated by making specific decisions. They differ from sunk costs, which are irreversible. Businesses need to understand these and other costs, including explicit, implicit, and marginal abatement costs, to make effective financial choices.
Step-by-step explanation:
Costs that can be eliminated by making specific choices are called avoidable costs. These are in contrast to sunk costs, which are costs that have already been incurred and cannot be recovered. Understanding the difference between various costs is essential for businesses to make informed decisions. Explicit costs are out-of-pocket payments for resources like wages and rent, while implicit costs represent the opportunity costs of using resources already owned, like foregoing a salary to work in the business. Furthermore, environmentally conscious decisions can lead to marginal abatement costs, which are costs associated with reducing pollution on a per-unit basis.