Costs which cannot be recovered if the firm decides to leave the market.
Below is a list of examples that can lead to unrecoverable costs arising. When firms invest in capital, this capital is subject to depreciation and as a result this piece of capital loses its value over time. This is unrecoverable as there exists no firm that would be willing to buy this unit of capital at its original price as it has depreciated over time. Advertising costs are also unrecoverable as these costs never get made back, indirectly it may help boost the firm's level of profit but the firm can never make this money back. Finally niche pieces of capital that are uniquely built for the specific production process of a firm are unlikely to provide any value and use to other firms and hence this capital cost can never be recovered as it can never be re-sold.
