Which of the following terms best describes a phenomenon whereby a profit-maximizing firm sticks with its current technology or product concept even though the profit-maximizing decision for a firm starting from scratch would be to choose a different technology or product concept?
A)The replacement effect
B)Strategic intent
C)Strategic stretch
D)Hypercompetition
E)The sunk cost effect

Question

Quizplus · Accepted Answer

The phenomenon described is known as the sunk cost effect, whereby a firm has invested heavily in a certain technology or product concept and is reluctant to switch to a different option even if it is more profitable. This is because the firm has already incurred sunk costs, which are irretrievable and therefore not relevant to future decision-making.

Which of the Following Terms Best Describes a Phenomenon Whereby