An Entrepreneur Gathers the Following Information to Make a Decision

question 53

Multiple Choice

An entrepreneur gathers the following information to make a decision on whether to stay open for business or to shut down permanently:
Future operating revenues = $18 million
Future operating costs = $14 million
Sunk costs = $8 million
The entrepreneur should:

• A) continue to operate because the operating revenues exceed the operating costs.
• B) shut down because the operating revenues are insufficient to cover the operating costs and sunk costs.
• C) shut down because the sunk costs are greater than zero.
• D) continue to operate to help pay off the sunk costs.

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Definitions:

Cumulative

Pertaining to an increasing total achieved by progressively adding successive amounts or elements together over time.

Buying Cycle

The process that customers go through, including awareness, consideration, and decision, before making a purchase.

Prospect Objections

Reservations or issues raised by potential customers that must be addressed by a salesperson to facilitate a sale.

Stalling Technique

A method used by buyers or sellers to delay decision-making or actions, often to negotiate more favorable terms or to gain more information.