The _______ Is the Tendency for People to Persist in Failing

question 119

Multiple Choice

The _______ is the tendency for people to persist in failing investments to avert loss, which causes losses to mount.

• A) endowment effect
• B) escalation effect
• C) sunk cost principle
• D) expectancy theory

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Definitions:

Long-Run Average Total Cost Curve

A graphical representation illustrating the per unit cost of producing a good or service in the long run, when all inputs are variable.

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.

Output

The total amount of goods or services produced by a company, industry, or economy over a certain period.

Constant Returns To Scale

Long-run average total cost is constant as output increases.