Ontel Engineers Proposed Developing a 10-Gigahertz Microprocessor in Early 2011

question 164

Multiple Choice

Ontel engineers proposed developing a 10-Gigahertz microprocessor in early 2011 at a cost of $20 million for a working prototype.By mid-2012,the $20 million had been spent with no prototype.The engineers request an additional $10 million to finish the project.For convenience,assume the marginal cost of producing the chip once it is developed is zero.
-A senior executive at Ontel argues that the engineers should only be granted the additional $10 million if Ontel can collect $30 million in revenues after the chip is developed.The executive's argument is

• A) correct.
• B) incorrect;Ontel need only collect $20 million.
• C) incorrect;the $20 million already spent is a marginal cost and should be ignored.
• D) incorrect;the $20 million already spent is a sunk cost and should be ignored.
• E) possibly correct;insufficient information to say.

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Definitions:

Presence Of A Weapon

Refers to situations or contexts where a weapon is available or detected, which can influence individuals' behavior and perceptions.

Aggression

Hostile or violent behavior or attitudes toward another, often with the intention to dominate, harm, or assert power.

Catharsis

The reduction of aggressive arousal by means of performing aggressive acts. The catharsis hypothesis states that we can purge ourselves of hostile emotions by intensely experiencing these emotions while performing aggression.

Aggression

Behavior intended to harm or injure another individual, either physically or psychologically.