Carl Recently Bought a Used Car-And It's a Lemon

question 94

Multiple Choice

Carl recently bought a used car-and it's a lemon.He has spent thousands of dollars on repairing the car,and this week,the mechanic told him it needs a new radiator.Carl thinks about how much money he has put into the car and thinks that,because he has invested so much money in repairs,he'd be better off just making the repair as opposed to spending money to buy a new car.Carl is a victim of

• A)overconfidence.
• B)the sunk-cost fallacy.
• C)opportunity costs.
• D)hindsight bias.

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Definitions:

Big Government

A term used to describe a government or state that is perceived as excessively interventionist and invasive in the lives of its citizens, usually through large bureaucracy and extensive policies.

Federal Law

Refers to the body of law created by the federal government of a country, which applies to the entire nation and is supreme over state laws where there is conflict.

Constitutional Rights

Rights afforded to individuals by the constitution that protect freedoms and legal principles from government infringement.