Assume There Are Two People in a Society

question 163

Multiple Choice

Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good.

• A) $300 for 1 unit
• B) $200 for 3 units
• C) $200 for 1 unit
• D) $160 for 5 units

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Definitions:

Illusory Correlation

The perception of a relationship between two variables when no such relationship exists.

Psychological Variable

An element, feature, or factor that can be changed and can affect the outcome of psychological research or behavior.

Correlation Coefficients

Statistical measures that determine the degree to which two variables vary together or the strength of their relationship.

Predictions

Statements or claims made about future events, often based on patterns observed in past data or understanding of processes.