Scenario 15.7: Consider the Following Information

question 135

Multiple Choice

Scenario 15.7:
Consider the following information:
You move to northern California and buy a winery that already holds a stock of some wine in barrels. You are deciding whether to sell the wine now, or keep it until next year. The current price of wine is $20 per bottle, and it costs $2 per bottle to get the wine from barrels to bottles.
-Based on the information in Scenario 15.7, if you expect the price to be $21 next year, you should:

• A) keep the wine in barrels until next year no matter what the interest rate.
• B) keep the wine if interest rates are above 5%.
• C) keep the wine if interest rates are below 5%.
• D) sell the wine now.
• E) do nothing until you know what the interest rate is going to be for the following year.

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Definitions:

Discipline

The practice of training to improve strength or self-control, often through the enforcement of rules.

Observational Learning

A learning process whereby individuals change their behavior after observing the actions and outcomes of others' behaviors.

Reinforcement

A principle in behaviorism that strengthens a behavior by providing a consequence an individual finds rewarding.

Albert Bandura

A prominent psychologist known for his work on social learning theory and the concept of self-efficacy.