What Is the Tendency for Decision Makers to Falsely Believe

question 112

Multiple Choice

What is the tendency for decision makers to falsely believe that they would have accurately predicted the outcome of an event once that outcome is actually known?

• A) the selective perception bias
• B) the randomness bias
• C) the sunk costs error
• D) the hindsight bias

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Definitions:

Cost-Based Transfer Prices

Pricing methods for transactions within an organization based on the costs incurred in producing or acquiring the transferred goods or services.

Standard Variable Cost

The estimated average variable cost per unit of output, factoring in material, labor, and overhead expenses.

Mark-Up

The percentage added to the cost of goods to determine the selling price, covering overhead and profit.

Agreed Transfer Price

The price at which goods or services are transferred between departments within a company or between affiliated companies.