Which of the Following Statements Is Incorrect

question 10

Multiple Choice

Which of the following statements is incorrect?

• A)To be efficient, a competitive equilibrium must allocate goods to consumers so that no reallocation of the goods could make all consumers better off.
• B)To be efficient, a competitive equilibrium must allocate inputs among firms so that no reallocation of inputs would result in a higher output of all goods.
• C)To be efficient, a competitive equilibrium must satisfy substitution efficiency.
• D)To be efficient, a competitive equilibrium must satisfy output efficiency.

---

Definitions:

Ignoring Base Rates

Ignoring base rates is a cognitive bias that involves disregarding or underestimating general information (base rates) in favor of specific individual information when making decisions or judgments.

Availability Bias

A cognitive bias that causes people to overestimate the likelihood of events based on their availability in memory, often leading to skewed decision-making.

Belief Perseverance

The tendency to cling to one's initial belief even after receiving new information that contradicts or disconfirms the basis of that belief.

Confirmation Bias

A predisposition to identify, comprehend, prioritize, and recollect facts in ways that corroborate one’s existing beliefs or suppositions.