What is the production possibility frontier?

1. The border between two countries
2. The amount of goods a given company produces
3. The amount of goods somebody wants to produce
4. The maximum an entity can produce with a given set of inputs

What is (economic) theory?

1. A proven concept that is 100% true. If we understand the theory, we automatically know how the world is working
2. A random collection of thoughts that should never be considered.
3. A framework that might offer guidance and which should be understood in its specific context.

What should rational agents do with sunk costs when considering their next decisions?

1. Include those costs into their considerations.
2. Ignore those costs when deciding.