Which of the Following Best Illustrates the Fallacy of Composition

question 156

Multiple Choice

Which of the following best illustrates the fallacy of composition?

• A) If the price of a product rises, the quantity produced will decline.
• B) The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation.
• C) Resources are scarce; therefore, there is no such thing as a free lunch.
• D) If Susan had more money she could buy more. If everyone had more money they could buy more.

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Definitions:

Consolidation

A contractual and statutory process in which two or more corporations join to become a completely new corporation.

Corporate Combinations

Mergers or acquisitions between companies to consolidate assets, operations, or management.

Merger

A contractual and statutory process in which one corporation (the surviving corporation) acquires all of the assets and liabilities of another corporation.

Appraisal Rights

The rights of shareholders to demand the payment of a fair valuation of their shares in the event of certain corporate actions, like mergers or consolidations, that they find unsatisfactory.