Assume Australia Can Use a Given Amount of Its Resources

question 24

Multiple Choice

Assume Australia can use a given amount of its resources to produce either 20 airplanes or eight automobiles and Japan can employ the same amount of its resources to produce either 20 airplanes or 10 automobiles. Australia should specialise in:

• A) airplanes.
• B) automobiles.
• C) both goods.
• D) neither good.

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Definitions:

Availability Bias

A cognitive bias that causes people to overestimate the importance or frequency of information that is readily available to them.

Confirmation Error

A cognitive bias that leads individuals to favor information or interpretations that confirm their pre-existing beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals inaccurately judge the probability of an event by comparing it to an existing prototype in their minds.

Heuristics

Heuristics represent simplified strategies or rules of thumb that individuals use to make decisions or solve problems quickly when faced with complex information or limited time.