Which of the Following Is an Example of Escalating Commitment

question 80

Multiple Choice

Which of the following is an example of escalating commitment?

• A) Polie is good at making hand-stitched decorative items like curtains, cushions, and so on. She starts selling them and notices that the demand for her items is increasing in neighboring areas. She hires two helpers and trains them to create more items to match the increasing demand.
• B) Loana starts her dream restaurant without any business experience. After six months, it becomes clear that her restaurant is not a successful venture. Loana continues to invest in the restaurant because she feels that she can turn it into a successful venture.
• C) Orlando, a senior manager in a manufacturing firm, wants to eliminate channel partners from the selling process. As a trial, he eliminates channel partners of one area of the city to see if it has an impact. This action results in increased sales in the area. Orlando then eliminates channel partners of the entire city and expects similar results.
• D) Beth is a highly motivated individual. Her motivation not only helps her productivity at work, but also motivates her colleagues to work better than they normally do.

---

Definitions:

Strip Bond

A debt security that has had its main components, such as principal and coupon payments, separated into individual parts and sold as zero-coupon bonds.

Yield Rate

The annual return on an investment, expressed as a percentage of the investment's cost.

Compounded Semi-annually

This refers to the process of calculating interest on an investment or loan, with the interest being added to the principal balance twice a year, typically every six months.

Strip Bond

A bond where both the principal and regular interest payments have been separated and are sold individually.