Jim Purchases Stock in a Public Company and He Refuses

question 13

Multiple Choice

Jim purchases stock in a public company and he refuses to sell it even after repeated drops in the original price he paid for the stock.Jim has decided to purchase more of the stock in anticipation of making a profit, and has decided to keep the stock in the face of increasing losses.Jim is suffering from

• A)organizational delusion.
• B)problem misidentification.
• C)escalation of commitment
• D)groupthink.
• E)self-reactions

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Definitions:

Normal Good

A good for which an increase in income raises the quantity demanded.

Inferior Good

A type of good for which demand decreases as the income of consumers increase, unlike normal goods for which demand increases with an increase in income.

Income Decrease

Income decrease refers to a reduction in the amount of money earned by an individual or received by a household, affecting their ability to spend and save.

Giffen Goods

A type of product that paradoxically experiences increased demand as its price rises, seemingly contrary to the basic law of demand due to the effect on consumption of essential goods.