Claude and Marie Are Excited Because They Have Just Bought

question 87

Multiple Choice

Claude and Marie are excited because they have just bought a restaurant from the previous owners. The two partners know that the last seven restaurants that have been operated at that location have gone bankrupt within a year of their openings, but Claude and Marie are certain their restaurant will be successful because they plan on working hard to be a success. In this case, the two new business partners are

• A) showing belief perseverance.
• B) showing evidence of the gambler's fallacy.
• C) showing the confirmation bias.
• D) apparently ignoring base rates.

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Definitions:

Oligopolistic Markets

Markets characterized by a few large producers that have the ability to influence prices, but must consider the actions of their rivals.

Minimum Efficient Scale

The lowest level of output at which a firm can minimize long-run average total cost.

U.S. Agriculture

The sector of the United States economy that deals with the production of plants and animals for food, fiber, and other products.

Farm Share

The portion of the final retail price of agricultural products that goes back to the farmers.