If Asked, "Which Is More Probable? A

question 29

Multiple Choice

If asked, "Which is more probable? A.Janice wears glasses and is a librarian.B.Janice is a librarian." Most people would answer A, although A is less likely to be true than B.According to Tversky and Kahneman, such faulty conclusions are based on

• A) the framing effect.
• B) convergent thinking.
• C) divergent thinking.
• D) the representativeness heuristic.

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Definitions:

FOB Shipping Point

Freight terms in which the buyer pays the transportation costs from the shipping point to the final destination.

Estimated Method

An accounting technique used to approximate values or quantities, such as depreciation or inventory levels, when exact figures are unavailable.

Inventory Costing

The process of assigning costs to inventory items based on the method chosen (e.g., FIFO, LIFO, or weighted average) to accurately value the inventory on the balance sheet and match costs to revenues on the income statement.

Perpetual Inventory

An inventory system that updates the quantity and value of inventory after each transaction or event.