Taking a Broader Perspective: the Problem of External Validity Manufacturers

question 31

Multiple Choice

Taking a Broader Perspective: The Problem of External Validity Manufacturers often test new products like shampoo on laboratory animals and then generalize their results to humans because

• A)human testing may be unethical due to the risk of injury.
• B)it is easier to replicate animal studies than human studies.
• C)it is often difficult to obtain human volunteers to test personal care products.
• D)laboratory animals and humans often show identical allergic reactions.

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Definitions:

Incremental Cost Approach

A decision-making process focusing on the costs that change with the level of production or the introduction of a new process.

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Discount Rate

The discount rate employed in the evaluation of discounted cash flow (DCF) to ascertain the current worth of prospective cash flows.

Overhaul Costs

Expenses associated with performing major maintenance or repairs to extend the life of an asset.