In General, People Try to Avoid Losses When Making a Decision

question 59

Essay

In general, people try to avoid losses when making a decision. Explain why this cognitive bias may affect a person's decision about accepting or rejecting various aspects of medical treatment.

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Definitions:

Marginal Revenue

The increase in income a business achieves through the sale of one extra unit of a product or service.

Marginal Cost

The extra charge involved in producing an additional unit of a product or service.

Average Total Cost

The total cost divided by the quantity of output produced, reflecting the average cost per unit of output.

Profit

The financial gain made in a transaction, calculated as the difference between the revenue received and the costs incurred.