You Are the Manager of a Retail Store

question 71

Multiple Choice

You are the manager of a retail store. You believe the economy is in a recession and that sales for the month will be unusually slow. Since you have complete discretion over the pricing at your location, you decide to have a store-wide sale and offer 10 percent off all merchandise for a 3-day period. You don't expect your superiors to criticize this decision as you believe they, along with the majority of the other store managers, feel the same way about the economy as you do. Which one of the following applies to you?

• A) Recency bias.
• B) Law of small numbers.
• C) Gambler's fallacy.
• D) False consensus.
• E) Money illusion.

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Definitions:

Interest-Bearing Note

A debt instrument that pays interest to the holder until its maturity.

Accrual of Interest

The recording of interest that has been earned but not yet paid or received in cash.

Stockholders' Equity

The owners' equity in a corporation, representing the residual assets of the company that would be due to stockholders after discharging all liabilities.

Long-Term Debt

Debt that is due for repayment more than one year in the future, often used for significant investments or acquisitions.