Bill and Jim were trying to decide where to eat. Bill suggested Lou's BBQ, but Jim said he had heard the service was terrible and the quality of the food was not consistent. Jim's comment is an example of __________ for Lou's BBQ.
A) prevention costs
B) internal-failure costs
C) quality assurance costs
D) appraisal costs
E) external-failure costs

Question

Quizplus · Accepted Answer

Jim's comment reflects dissatisfaction from customers or potential customers due to perceived or actual shortcomings in the product or service, which is an example of external-failure costs. These costs are associated with defects that are found after the product or service reaches the customer.

Bill and Jim Were Trying to Decide Where to Eat