Malik and His Managers Spent a Large Sum of Money

question 58

Multiple Choice

Malik and his managers spent a large sum of money on the new training program,and they feel that there has been little improvement as a result of the investment.The training is scheduled to continue for two more months,and Malik feels that the company has already spent too much money on the training to simply abandon it.Malik is experiencing

• A)blind bias.
• B)a training trap.
• C)confirmation bias.
• D)sunk-cost bias.
• E)a catch-22 effect.

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Definitions:

Profit Maximization

The process or strategy aimed at achieving the highest possible profit where total revenue exceeds total costs.

Average Total Cost

The total cost of production divided by the number of goods produced, indicating the per unit cost of production.

Marginal Cost

The cost of producing one additional unit of a good or service.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as the production level varies.