How Can the Availability Heuristic Lead to the Base-Rate Fallacy

question 100

Multiple Choice

How can the availability heuristic lead to the base-rate fallacy?

• A) by increasing people's confidence in the percentage of others who share their opinions
• B) by increasing people's confidence that an unlikely event will occur
• C) by increasing people's tendency to make situational attributions
• D) by bringing to mind events that could have happened but didn't

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Definitions:

Average Variable Cost

Average Variable Cost is the total variable costs (costs that change with the level of output) divided by the quantity of output produced, representing the cost of producing one additional unit of goods or services.

Marginal Cost

Expenses related to the production of an additional unit of any good or service.

Short-Run Supply

A graphical representation that shows the quantity of goods that suppliers are willing and able to produce and sell at different prices in the short-term, with some inputs fixed.

Short Run

A time period in economics where at least one factor of production is fixed, limiting the immediate response to changes in demand or supply.