Suppose That You Are Having a Serious Argument with a Friend

question 102

Multiple Choice

Suppose that you are having a serious argument with a friend, and you are convinced that your own perspective is correct. According to the discussion in Chapter 12, this situation is an example of

• A) hindsight bias.
• B) my-side bias.
• C) the crystal-ball technique.
• D) the conjunction rule.

---

Definitions:

Golden Rule

A principle denoting the optimal level of saving in an economy that results in the highest possible steady-state level of consumption.

Social Optimum

A condition in which resources are allocated in the most efficient manner, often considered in terms of welfare or utility maximization.

Market Equilibrium

The state in a market where the quantity demanded of a good matches the quantity supplied, leading to a stable price for the good.

Corrective Subsidy

A financial incentive provided by the government designed to encourage activities that yield external benefits or to correct a market failure by reducing private costs.