John Learns About Michelle, a Student at a State University

question 85

Multiple Choice

John learns about Michelle, a student at a state university in New York, who has blond hair, enjoys summer, and likes the beach. John assumes she is from California (given the stereotypes about women from California) despite the fact that over 85% of students at this state university are from New York. This is best explained by

• A) divergent thinking.
• B) algorithms.
• C) knowledge of the base rate.
• D) the representativeness bias.
• E) convergent thinking.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers is equal to the quantity supplied by producers, resulting in a balance without excess supply or demand.

Producer Surplus

The variance between the price producers want to sell an item for and the price they end up receiving.

Equilibrium Price

The price point at which the quantity of a good or service supplied equals the quantity demanded.

Consumer Surplus

The disparity in what consumers are willing to invest in a good or service compared to what they eventually invest.