Abstraction Provides a Way to Simplify Complex Problems by Generalizing

question 47

True/False

Abstraction provides a way to simplify complex problems by generalizing and then representing only essential features appropriate to the problem.

Distinguishing between sunk costs and relevant costs in project evaluation.

Understanding the concept of externalities and their impact on project cash flows.

Recognizing the importance of using appropriate depreciation methods and understanding their tax implications.

Acknowledging the need for sensitivity analysis in assessing project risk.

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Definitions:

Collectivism

An ideology or value system that emphasizes the priority of group goals over individual goals and the importance of cohesion within social groups.

Situationism

A theory in psychology that suggests human behavior is greatly influenced by external situational factors rather than by internal traits or motivations.

Fundamental Attribution Error

The tendency for observers to underestimate situational influences and overestimate personal characteristics when explaining others' behaviors.

Actor-observer Effect

The tendency to attribute one's own actions to external factors while attributing others' actions to their character or disposition.