The Base Rate Fallacy Is an Error Resulting from the Use

question 28

Multiple Choice

The base rate fallacy is an error resulting from the use of which heuristic?

• A) the availability heuristic
• B) the representativeness heuristic
• C) the anchoring heuristic
• D) the false-consensus effect

---

Definitions:

Lost Sales

Revenue that a company could have earned but didn't because of not having enough stock, closing an order, or other reasons.

Merchandise Inventory

Refers to the goods a company holds for the purpose of selling them to customers. It is considered a current asset on the balance sheet.

Budgeted Cost

This refers to the predicted costs of goods, services, projects, or operations that are planned for a future period.

Merchandise Purchases Budget

An estimate detailing the amount of goods a company plans to purchase over a certain period to meet its sales and inventory needs.