Although the cost of a smelting plant is substantial (over $1 billion), we will assume that the plant cannot be sold; the expenditure is therefore sunk and can be ignored. Furthermore, because fixed costs, which are largely for admin-istrative expenses, are relatively small, we will ignore them also. Thus we can focus entirely on short-run variable costs. Table 7.2 shows the average (per-ton) production costs for a typical aluminum smelter.