The Fallacy of Composition Is the Incorrect View That

question 221

Multiple Choice

The fallacy of composition is the incorrect view that

• A) decisions are always made at the margin.
• B) incentives matter only to those who behave selfishly.
• C) if something is true for an individual, then it must also be true for the group.
• D) the value of a good can be objectively measured by its cost of production.

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Definitions:

Agency Agreement

A legal contract creating a fiduciary relationship wherein the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements.

Writing

A method of recording language through the inscription or recording of signs and symbols.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another. The party in a fiduciary relationship is usually referred to as the fiduciary, while the other is the principal or beneficiary.

Breach

The violation or failure to comply with a legal obligation, contract, or agreement.