The Human Tendency to Judge Options According to the Size

question 2

Multiple Choice

The human tendency to judge options according to the size of previous investments rather than the size of the expected return is called:

• A) economic loss.
• B) the sunk-cost fallacy.
• C) groupthink.
• D) a framing error.

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Definitions:

Break-Even Analysis

A calculation to determine the sales level at which a company covers its costs, with no profit or loss.

Pattern Designers

Professionals who create templates for parts of garments or other items, ensuring they fit together perfectly to produce the intended design.

Fixed Cost

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Color Dyes

Chemical substances used to impart color to various materials, including textiles, hair, and paper.