Which of the Following Is NOT an Example of the Anchoring

question 30

Multiple Choice

Which of the following is NOT an example of the anchoring effect (i.e., choices are affected by spurious information) ?

• A)The French and British governments completed construction of the Concorde because they had so much money tied up in research and development that would have been wasted if the project were cancelled.
• B) People are reluctant to sell stock they have received as a gift even if they would not have chosen to purchase the stock.
• C) Investors purchase shares of a stock on plausible rumors of increased future earnings.
• D) Investors liquidate common stock and hold cash because they fear that the stock market will fall because the American League won the World Series.
• E) a.and c.are correct.

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Definitions:

Machine-Hours

A measure of the amount of time machines are running in the production process, used as a basis for allocating overhead costs.

Manufacturing Overhead

All indirect costs related to the production process, such as maintenance, utilities, and quality control, not directly traceable to a product.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the production process begins based on estimated costs and activity levels.

Job-Order Costing

An accounting method used to assign costs to specific products or jobs, typically utilized in custom or specialized production.