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A local restaurant initially estimated a large demand for dining in a space near a floor-to-ceiling fish tank. The cost of the tank is $8 million. (Assume that such a tank has no resale value.) The owner moved ahead with the project and the tank is three-fourths done (i.e., $6 of the $8 has been spent). However, the owner is having second thoughts about how substantial the demand for such a dining experience is. The local paper quotes him as saying: " . . .given that the tank is three-fourths complete, it makes sense to go ahead with completion and opening the restaurant.”

(a) Does this statement reflect the appropriate decision-making criteria?

(b) What is the appropriate criterion?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91522571

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