One Might Commit the Fallacy of Composition by Concluding That

question 24

Multiple Choice

One might commit the fallacy of composition by concluding that:

• A) statements that are true during prosperity are not necessarily true during depression.
• B) what is good for the individual is necessarily good for the group.
• C) an event that precedes another is necessarily the cause of the latter.
• D) intentions need not coincide with actions.
• E) the composition of a complex product is not revealed by its exterior appearance.

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Definitions:

Period Cost

Expenditures that are not directly tied to the production process and are expensed in the period in which they are incurred.

Product Cost

The total expense incurred to produce and make ready for sale a product, including direct materials, labor, and overhead costs.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

Total Expected Cost

A projection of the total costs associated with a project or business activity, including both fixed and variable costs.