The Draper Corporation Is Considering Dropping Its Doombug Toy Due

question 413

Multiple Choice

The Draper Corporation is considering dropping its Doombug toy due to continuing losses. Data on the toy for the past year follow: If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs. The remainder of the fixed costs are not avoidable.Suppose that if the Doombug toy is dropped, the production and sale of other Draper toys would increase so as to generate a $16,000 increase in the contribution margin received from these other toys. If all other conditions are the same, the financial advantage (disadvantage) from discontinuing the production and sale of Doombugs would be:

• A) ($6,000)
• B) $14,000
• C) ($2,000)
• D) $28,000

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Definitions:

Contingency Blocking

A phenomenon in classical conditioning where a subject learns to associate a particular stimulus with an outcome, blocking the learning of an association with a new stimulus presented at the same time.

Response Generalization

The process by which a learned response is applied to similar stimuli beyond the original conditioned stimulus.

Conditioned Stimulus

an originally neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

Little Albert

A famous psychology experiment conducted by John B. Watson and Rosalie Rayner, involving classical conditioning to induce a fear response in an infant named Albert.