BU247- Final Exam Guide - Comprehensive Notes for the exam ( 26 pages long!)
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Mixed costs: has a fixed and variable component, ex. Salespeople have a fixed salary but can earn commission: shape of graph can vary. Incremental costs: cost changes associated with any decision, ex. When you usually walk home but decide to take the bus. Incremental cost is the bus fare: deciding to go on vacation. Incremental cost is the cost of the vacation. Sunk cost: a cost that you already recognize, ex. If you pay rent, that cost is a sunk cost: sunk cost phenomenon, pursuing a course of action long after an objective outsider would pursue that action, explanations, framing, commitment and unwilling to accept defeat, loss of face. Opportunity cost: what you give up to pursue a course of action, ex. Avoidable costs: cost you save by choosing a course of action, opposite of incremental costs. If their salary depends on how many hours they work or how much they produ(cid:272)e, it"s (cid:448)aria(cid:271)le.