If Accurate Judgments Are Our Goal, We Should Use Base

question 41

Multiple Choice

If accurate judgments are our goal, we should use base rate information instead of the representativeness heuristic when __________.

• A) we lack specific information about the person
• B) base rates are high in the sample
• C) base rates are low in the sample
• D) the decision is a complicated one

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time.

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the shares remains the same.

Retained Earnings

Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business.

2-for-1

Describes a type of stock split where a company divides its existing stock into two shares, effectively doubling the number of shares owned by shareholders but potentially halving the price per share.