Josephine Is About to Graduate from College and Is Excited

question 9

Multiple Choice

Josephine is about to graduate from college and is excited about joining her two roommates to start a small coffee shop near campus.She has never started a business before,but she is sure that her business degree has taught her everything she needs to know.The three of them have enough money for their initial costs and figure that they can cover their expenses with the cash flow from the business.Which heuristic is probably involved?

• A) representativeness
• B) anchoring
• C) availability
• D) fundamental attribution error
• E) overconfidence

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Definitions:

Short-run Profits

Short-run profits occur when a company's revenue exceeds its operating costs within a particular, relatively brief period.

Long Run

A period in economics where all inputs, including capital and labor, can be adjusted.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taking behavior.

Monopolistically Competitive

Refers to a market configuration in which multiple companies offer products that are alike but not exactly the same, enabling considerable distinction and a limited amount of influence over the market.