A Cost That Will Not Be Affected by Later Decisions

question 154

Multiple Choice

A cost that will not be affected by later decisions is termed a(n) :

• A) period cost
• B) differential cost
• C) sunk cost
• D) replacement cost

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Definitions:

Framing Effect

The cognitive bias where people decide on options based on whether they are presented in a positive or negative way, rather than on the content itself.

Confirmation Bias

The inclination to seek out, understand, prefer, and remember details in a manner that validates one's existing opinions or theories.

Sunk Cost Effect

The phenomenon where a person continues an endeavor because of previously invested resources (time, money, or effort), despite potential losses.

Availability Heuristic

The availability heuristic is a mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.