​Match Each of the Following Situations with the Concept It

question 46

Multiple Choice

​Match each of the following situations with the concept it most clearly illustrates.
-escalation of commitment

• A)Hugh needs to buy a new laptop.He searches online until he finds the first laptop that fits his price and performance needs, then he immediately buys it.
• B)In a hand of poker, Kevin makes a bid and Julie calls.Later, Kevin makes a higher bid, and Julie calls again.At the end of the hand, when Julie goes all in, Kevin's almost certain she has the better cards.However, because he's already invested so much in the hand, Kevin feels obliged to call.
• C)On paper, the candidate seems excellent, so Nina invites him for an interview, which goes swimmingly.Still, something about the guy seems "off" to Nina, and though she can't put her finger on what it is, she hires someone else.
• D)Simone knows that the laptop she's about to buy from the electronics store is both more expensive and of lower quality than a laptop she could buy online.However, she desperately needs a laptop immediately, so goes ahead with the purchase.

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Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, often used as an investment for retirement.

Earnings Rate

A measure of the profitability of a company or investment, typically expressed as a percentage.

Net Present Values

A method used in capital budgeting to analyze the profitability of an investment or project by calculating the present values of all cash inflows and outflows.

Useful Life

The estimated duration of time an asset is expected to be usable for its intended purpose.