A Business Anticipates Future Operating Revenues of $200 Million, Future

question 52

Multiple Choice

A business anticipates future operating revenues of $200 million, future operating costs of $150 million, and sunk costs of $60 million. This business should:

• A) permanently shut down because the value of staying open is negative.
• B) continue operations because the sunk costs are less than the future operating revenues.
• C) continue operations because the future operating revenues are greater than the future operating costs.
• D) permanently shut down because the ratio of future revenues to future costs is less than two.

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Definitions:

Classical Conditioning

A teaching approach whereby, through consistent pairing, a response initially elicited by a secondary stimulus is in time elicited by the primary stimulus.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, where an association is made between a behavior and a consequence for that behavior.

Transference Learning

The process by which knowledge or skills learned in one context are applied or transferred to a new context.

Human Genome Project

An international scientific research project that successfully mapped and understood all the genes of human beings, known collectively as the genome.