Suppose a Person Makes a Choice That Seems Inconsistent with the Cost-Benefit

question 122

Multiple Choice

Suppose a person makes a choice that seems inconsistent with the cost-benefit principle. Which of the following statements represents the most reasonable conclusion to draw?

• A) The person (explicitly or implicitly) over-estimated the benefits or under-estimated the costs or both.
• B) The cost-benefit principle is rarely true.
• C) The person does not grasp how decisions should be made.
• D) The person is simply irrational.

---

Definitions:

Standard Error

The standard deviation of the sampling distribution of a statistic, particularly mean, indicating the variability of an estimate from sample to sample.

Positively Skewed

A description of a distribution of data in which the tail on the right side of the histogram is longer than the left side, indicating that most values are clustered on the left.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used to estimate the population parameter.

Normal Populations

Populations that follow a normal distribution, where the majority of data points are concentrated around the mean value.