Rupert, Who Leads the Design Team in an Automobile Firm

question 70

Multiple Choice

Rupert, who leads the design team in an automobile firm, decides not to invest in a particular technology that helps to improve the fuel efficiency of cars, as other automobile companies who had invested in similar technologies had not achieved much success. The type of decision-making error made by Rupert is known as _____.

• A) availability bias
• B) confirmation error
• C) adjustment bias
• D) lack-of-participation error
• E) representativeness bias

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Definitions:

Opportunity Cost

The expense incurred by not selecting the second-best choice during a decision-making process or when evaluating different alternatives.

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way possible.

Marginal Rate

Often refers to the marginal rate of substitution or marginal rate of transformation in economics, indicating the rate at which one good can be substituted for another.

Transformation

The process of converting inputs into outputs, often relating to the change of raw materials into finished products in the context of production.