Which of the Following Statements Best Illustrates the Fallacy of Composition

question 31

Multiple Choice

Which of the following statements best illustrates the fallacy of composition?

• A) the error of omitting relevant variables from an economic model
• B) the error of confusing normative economics with positive economics
• C) the error of generalizing from the individual to the whole
• D) the error of confusing correlation with causation

---

Definitions:

Circular-flow Model

A financial framework depicting the ongoing flow of cash, commodities, and productive inputs between businesses and the public within an economic system.

Resource Market

The marketplace where resources or inputs such as labor, capital, and raw materials are bought and sold.

Product Market

A marketplace where final goods or services are offered to consumers, businesses, and the government.

Corporate Income Tax

A tax imposed by governments on the income generated by businesses and corporations.