Imagine That Your Professor Is Discussing the Prevalence of Psychological

question 37

Multiple Choice

Imagine that your professor is discussing the prevalence of psychological disorders in the general population, and he says, "A study conducted in 2012 estimated that about 11% of the population has a psychological disorder at any one time." If you were to estimate a confidence interval, based on this number-11%-you would be most likely

• A) to use the confirmation bias inappropriately.
• B) to estimate this range by using the availability heuristic, which would be biased because of recent examples.
• C) to rely too heavily on an anchor, and not make large enough adjustments to that anchor.
• D) to use decision frames inappropriately.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell, typically upwards sloping.

Consumer Surplus

The difference between the sum total consumers are ready and capable of contributing towards a good or service and what they genuinely contribute.

Price Floor

A government-imposed minimum price below which a specific good or service cannot legally be sold, aimed at protecting producers or encouraging certain activities.

Total Surplus

The complete net profit to society from the production and consumption of a good or service, reflected in the sum of consumer surplus and producer surplus.