Describe the Differences Between Representative, Availability and Anchoring and Adjustment

question 45

Essay

Describe the differences between representative, availability and anchoring and adjustment heuristics.

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Definitions:

Long-run Total Costs

The total costs associated with the production of a certain level of output when all inputs can be varied, emphasizing the period in which no costs are fixed.

Diseconomies of Scale

Diseconomies of scale occur when a company or business grows to such a point that the costs per unit increase, opposite of achieving cost efficiencies through expansion.

Specialization

The process of focusing effort and resources on a limited number of activities to increase efficiency and productivity.

Constant Returns to Scale

A situation in which increasing the amount of inputs in production results in a proportional increase in output.