Cindy has pumped over $850,000 into a small business that has consistently lost money every year it has been open.She reasons that she has to continue investing time and money in her business because she's "already put so much into it" (instead of selling the business and cutting her losses).Cindy's reasoning illustrates:
A)rational economic theory.
B)the conjunction fallacy.
C)the sunk-cost fallacy.
D)the law of demand.

Question

Quizplus · Accepted Answer

Cindy's reasoning is an example of the sunk-cost fallacy, which is the tendency to continue investing in a project or decision based on the amount of resources already invested, regardless of whether it is still profitable or feasible.

Cindy Has Pumped Over $850,000 into a Small Business That