The Tendency to Imagine Alternative Scenarios and Outcomes That Might

question 118

Multiple Choice

The tendency to imagine alternative scenarios and outcomes that might have happened but did not is called

• A) the base-rate fallacy.
• B) automatic thinking.
• C) reflective bias.
• D) counterfactual thinking.

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Definitions:

Increasing Opportunity Costs

The concept that as the production of one good is increased, the opportunity cost of producing additional units rises.

Production Possibilities Curve

A graph that shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized.

Bowed Outward

Refers to the shape of a production possibility frontier that shows increasing opportunity costs as production shifts between two goods.

Absolute Advantage

A situation in which a nation, as the result of its previous experience and/or natural endowments, can produce more of a good (with the same amount of resources) than another nation can.