The Sunk-Cost Bias Causes Decision Makers to Emphasize Past Investments

question 160

True/False

The sunk-cost bias causes decision makers to emphasize past investments of time and money when deciding whether to continue with a chosen course of action.

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Definitions:

Total Cost

The sum of fixed and variable costs incurred by a business in the production of goods or services.

Profit

The financial gain achieved when the revenue gained from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Economic Profit

The disparity between total income and total outlays, considering both manifest and concealed costs.

(P - ATC)q

The formula representing profit in economic terms, where P stands for price, ATC for average total cost, and q for quantity produced or sold.