Which Kind of Decision Rule Is Being Used by a Consumer

question 76

Multiple Choice

Which kind of decision rule is being used by a consumer who says that good performance on one or more attributes cannot "make up for" poor performance on other product attributes?

• A) non-compensatory rule
• B) compensatory rule
• C) average mean rule
• D) simple additive rule

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Definitions:

Profitability Index

A financial tool used to determine the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Internal Rate of Return

A financial metric that estimates the profitability of potential investments by calculating the discount rate that makes the net present value of all cash flows from a project equal to zero.

Internal Rate of Return

The discount rate at which the net present value of all cash flows from a project equals zero, used to assess the profitability of potential investments.

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.