Understanding How Costs Behave Is Useful to Management for All

question 78

Multiple Choice

Understanding how costs behave is useful to management for all the following reasons except

• A) predicting customer demand
• B) predicting profits as sales and production volumes change
• C) estimating costs
• D) changing an existing product production

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Definitions:

Anchoring and Adjustment Heuristic

A cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.

Representativeness Heuristic

A mental shortcut people use where the likelihood of an object belonging to a particular category is assessed based on how typical that object is thought to be of the category.

Availability Heuristic

A cognitive bias that causes people to overestimate the likelihood of events based on their ability to recall similar instances.

Escalation Heuristic

A cognitive bias or decision-making process where individuals increase their commitment to a previously taken course of action beyond the level that is justified by the current situation.