The Availability Heuristic Can Cause People to Incorrectly Assess the Probabilities

question 169

Multiple Choice

The availability heuristic can cause people to incorrectly assess the probabilities of various events because:

• A) the most available event is not always the most frequent
• B) the most likely event is not always the most frequent
• C) it is too difficult to compute joint probabilities of events
• D) it is too difficult to distinguish between probabilities and likelihoods

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Definitions:

Input X

Represents a variable or factor in production or another economic model, signifying a specific input or resource used in a process.

Marginal Revenue Product

The additional revenue a firm generates by employing one more unit of input, typically labor.

Labor Market

A marketplace where labor services are bought (by employers) and sold (by workers), determining the allocation of labor resources and wages.

Equilibrium

A state in a market where the quantity supplied equals the quantity demanded, leading to a stable situation where there is no tendency for change.