You Estimate the Number of Soft Drinks You'll Need for the 4th

question 20

Multiple Choice

You estimate the number of soft drinks you'll need for the 4th of July picnic, based on the Christmas party consumption, but taking into account the fact that the weather will be warmer. Which heuristic does this example illustrate?

• A) Availability
• B) Base rate fallacy
• C) Anchoring and adjustment
• D) Representativeness

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Definitions:

Consumption

The use of goods and services by households or individuals, typically relating to spending on products and services.

Permanent Income Hypothesis

A theory suggesting that a person's consumption at a point in time is determined not just by their current income but by their longer-term income expectations.

Consumer Binge

A period characterized by excessive spending and consumption by consumers.

Bank Credit Cards

Financial instruments issued by banks that allow holders to borrow funds up to a predetermined limit for purchases or cash withdrawals.