When Making Choices, Suppliers Should Not Allow Sunk Costs to Directly

question 99

Multiple Choice

When making choices, suppliers should not allow sunk costs to directly affect their current decisions because

• A) sunk costs do not reflect foregone opportunities accompanying current choices.
• B) sunk costs will not influence the accounting costs of a firm.
• C) sunk costs influence the demand for products, not the supply.
• D) past choices fail to provide any information relevant to current decision making.

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Definitions:

Human Judgment

The cognitive process of making decisions or drawing conclusions based on personal knowledge, experience, senses, and emotions.

Additive Form

A mathematical or statistical model where the components or factors are combined through addition to predict or estimate outcomes.

Systematic Component

The part of a process or model that can be directly explained by variables within the system, leading to predictable outcomes.

Seasonal Factor

Variations in demand, supply, or other business indicators that occur at specific times of the year.