A Firm Can Respond to One of Its Competitors' Introduction

question 20

Multiple Choice

A firm can respond to one of its competitors' introduction of a lower-priced product by starting to produce its own lower-cost product abroad and importing it.Such a strategy is called

• A) insourcing.
• B) foreign investment.
• C) just-in-time.
• D) outsourcing.
• E) None of the above

---

Definitions:

Anchoring and Adjustment Heuristic

A cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.

Representativeness Heuristic

A mental shortcut people use where the likelihood of an object belonging to a particular category is assessed based on how typical that object is thought to be of the category.

Availability Heuristic

A cognitive bias that causes people to overestimate the likelihood of events based on their ability to recall similar instances.

Escalation Heuristic

A cognitive bias or decision-making process where individuals increase their commitment to a previously taken course of action beyond the level that is justified by the current situation.