When the Intuitive Error of the Representativeness Heuristic Is Used

question 490

Multiple Choice

When the intuitive error of the representativeness heuristic is used in making decisions, this means that

• A)the underlying odds of an event occurring are emphasized.
• B)incorrect syllogisms are used.
• C)the problem was incorrectly framed.
• D)one selects wrong answers because they seem to match preexisting mental categories.

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Definitions:

Single Source

The practice of obtaining a particular product, service, or component from a single supplier, making the supplier the exclusive provider.

Average Cost

The total cost of goods available for sale divided by the total units available for sale, determining the cost of inventory.

WACC

The Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. It represents the minimum return that a company must earn on its existing asset base to satisfy its creditors, owners, and other providers of capital.

Component Cost

The cost associated with each separate element (debt, equity, etc.) that comprises the overall cost of capital for a firm.