A Manager Orders a Large Quantity of Stock at a Discounted

question 4

Multiple Choice

A manager orders a large quantity of stock at a discounted price from their supplier. Sales over the following period are poor, but the supplier offers the same deal three months later. The manager purchases another large quantity of the same item, but sales remain poor. The manager has fallen into the:

• A) framing trap.
• B) confirmation bias trap.
• C) not cutting your losses trap.
• D) pattern recognition trap.
• E) sticking with the status quo trap.

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Definitions:

Investment Tax Credits

Tax credits available to individuals and companies that reduce their tax bill as a direct incentive for investing in certain assets or for specific types of investments.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in successive quarters.

Investment Goods

Products purchased for future production or used to produce other goods, rather than being consumed by the buyer.

Time Inconsistency

The tendency for preferences or decisions to change over time in a way that a person's earlier preferences or decisions become inconsistent with their later ones.