Which Pitfall to Sound Economic Reasoning Is Illustrated When a Person

question 119

Multiple Choice

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

• A) abstraction
• B) biases
• C) the fallacy of composition
• D) confusing correlation and causation

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Definitions:

Variable Costing

Variable costing is an accounting method that only considers variable costs, which change with production levels, in the cost of goods sold and excludes fixed manufacturing overhead.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a period of time.

Absorption Costing

An approach to pricing that involves including every manufacturing expense - like direct materials, direct labor, as well as fixed and variable overheads - in calculating the cost of a product.

Income Statement

A financial statement that reports a company’s financial performance over a specific accounting period.