The Gambler's Fallacy Suggests That What Happened in the Past

question 89

Multiple Choice

The gambler's fallacy suggests that what happened in the past will influence the present. Suffering from the gambler's fallacy is most likely TRUE in which of the following situations?

• A)flipping cards from a single deck
• B)tossing a fair coin
• C)the quality of play of a baseball team
• D)horse racing

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Definitions:

Income Increases

Situations where an individual's or household's earnings rise, potentially affecting their spending, saving, and investment behaviors.

Budget Constraints

The limitations on the consumption choices of individuals or organizations due to limited resources.

Substitution Effect

The economic principle that as prices rise or incomes decrease, consumers will replace more expensive items with less costly alternatives.

Budget Constraints

The limitations on the consumption bundles that a consumer can afford based on their income and the prices of goods and services.