Tim Has Noticed That Every Time Women's Hemlines Rise,stock Market

question 72

Multiple Choice

Tim has noticed that every time women's hemlines rise,stock market prices rise.He is therefore poised to invest in stocks the next time the local fashion editor predicts that shorter skirts will be in for the next season.Tim's error is called:

• A)ceteris paribus.
• B)the fallacy of composition.
• C)the interpretation of association as causation.
• D)the scientific method.
• E)selfish behavior.

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Definitions:

Hidden Characteristic

In economics and contract theory, a hidden characteristic refers to information about a product, service, or individual that is not known beforehand by one of the parties in a transaction, potentially leading to problems like adverse selection.

Asymmetric Information

A situation where one party in a transaction has more or superior information compared to another.

Car Insurance

A contract between a vehicle owner and an insurance company, providing financial protection against physical damage or bodily injury from traffic collisions.

Asymmetric Information

An instance where in a transaction, one entity has higher or more detailed information than another.