Which One of the Following Decisions Most Clearly Reflects a Lack

question 39

Multiple Choice

Which one of the following decisions most clearly reflects a lack of understanding of the concept of sunk costs?

• A) You pay to have your car towed back to the repair shop because it was not fixed properly the first time.
• B) You decide to get a master's degree because you cannot find a job in the field in which you majored.
• C) You decide to purchase a piece of machinery for your business that will eliminate three employees' positions.
• D) You study eight hours for a final exam even though there is no way now that you can pass the course.

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Definitions:

Oligopoly Market

A market structure characterized by a small number of firms dominating the market, leading to limited competition and potentially strategic interactions among the firms.

Dominant Strategy

A strategic option that yields the best outcome for a player, irrespective of what strategies other players adopt.

Nash Equilibrium

A concept in game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged.

Prisoner's Dilemma

A fundamental problem in game theory that demonstrates why two rational individuals might not cooperate, even if it appears that it is in their best interest to do so.