Search results
A measure of profit that includes recognition of implicit costs (like the cost of equity capital). Economic profit measures the true profitability of decisions. Fixed-cost fallacy. consideration of costs that do not vary with the consequences of your decision (also known as sunk-cost fallacy).
The fixed-cost fallacy occurs when: a. a firm considers irrelevant costs. b. a firm ignores relevant costs. c. a firm considers overhead or depreciation costs to make short-run decisions. d. both a and c.
(A) The full-cost fallacy occurs when a decision-maker fails to include fixed manufacturing overhead in the product's cost. (B) When deciding whether or not to accept a special order, a decision-maker should focus on differential costs instead of full costs.
influenced by sunk costs in their decision-making, they are said to be committing the “sunk cost fallacy”, summarized by Kelly (2004) as the conjunction of two claims: (1) individuals often do give weight to sunk costs in their decision-making, and (2) it is irrational for them to do so.
1 lut 2017 · When people are influenced by sunk costs in their decision-making, they are said to be committing the “sunk cost fallacy”, summarized by Kelly (2004) as the conjunction of two claims: (1 ...
The fixed-cost fallacy occurs when a company considers sunk costs (costs that have already been incurred and cannot be recovered) when making future decisions. This is incorrect because sunk costs should be ignored as they are irrelevant to future decisions.
• Explain why average costs are at a minimum when they cross the marginal cost curve • Explain/know the condition when a frm will shut down (1) in the short run and (2) in the long run
