The Members of Ike's Fraternity Think Spending the Entire Activity

question 81

Multiple Choice

The members of Ike's fraternity think spending the entire activity fund for the cultural fest is reasonable. Ike does not think this is a good idea but he decides to keep quiet rather than offend his fraternity brothers and risk being ridiculed. This scenario illustrates a symptom of:

• A) groupthink.
• B) deindividuation.
• C) the diffusion of responsibility.
• D) the self-serving bias.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of production in a business.

Fixed Costs

Fixed costs refer to expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Total Costs

The aggregate amount of money spent on producing goods or services, covering both stable and changeable costs.

Economic Profit

The discrepancy between a company's overall income and its combined explicit and implicit expenses.