Anchoring Occurs When

question 54

Multiple Choice

Anchoring occurs when:

• A) a trivial factor is used as a starting point for estimations in a decision-making problem.
• B) a difficult factor is incorporated in a problem.
• C) an easy solution is obtained to a difficult problem.
• D) obtaining a solution is trivial.

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms are making neither excess profit nor losses, typically reached over time.

Decreasing-Cost Industry

An industry in which expansion through the entry of firms lowers the prices that firms in the industry must pay for resources and therefore decreases their production costs.

Long-Run Supply Curve

A graphical representation showing the relationship between market prices and the amount of output that firms are willing to supply in the long run.

Industry Expansion

The process of an industry growing in size, output, or number of participants, often through increased demand or technological advancements.