Refer to Figure 26

question 134

Multiple Choice

Refer to Figure 26.3 for a monopolistically competitive firm. The allocatively efficient output for this firm is

• A) Q₁.
• B) Q₂.
• C) Q₃.
• D) Zero. The firm should shut down because it is not earning an economic profit.

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Definitions:

Availability Bias

A cognitive bias where people overestimate the importance of information that is readily available to them.

Confirmation Error

A cognitive bias where individuals favor information that confirms their existing beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals incorrectly assess the likelihood of an event based on how closely it resembles their stereotypes of a category.

Lack-of-participation Error

A common mistake in decision-making processes, where not all relevant parties are involved, leading to suboptimal outcomes.