Les Just Bought a Megaphone of Root Beer

question 39

Multiple Choice

Les just bought a megaphone of root beer. As he drinks from the giant cup, he eventually becomes full. One of his friend's comments, "If you don't stop drinking that stuff, you will get sick." Les replies, "Hey, I bought it, and I am not going to waste one drop of it." Les's behavior could best be described by which of the following mental biases?

• A) loss aversion
• B) hyperopia
• C) risk positioning
• D) the sunk-cost fallacy

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses from revenue, also known as the bottom line.

Constant Percentage

A fixed proportion or rate that is applied to a specific calculation, such as in investment strategies or financial formulas.

Tax Rate

The percentage at which an individual or corporation is taxed, often varying based on income or profit levels.

Cash Dividends

Dividends paid in the form of cash to shareholders, typically out of the company's current or retained earnings.