Tom Is Considering Moving to a New City

question 39

Multiple Choice

Tom is considering moving to a new city. He reads that the employment rate in that city is 90 percent, which he thinks is very favorable. Ted is considering moving to the same city, but he reads that the unemployment rate is 10 percent, which he thinks is unacceptably high. Why would Tom and Ted reach such different conclusions based on the same statistics?

• A)Tom received information that was framed in a favorable way, whereas Ted received the exact same information but framed in an unfavorable way.
• B)Tom used base-rate data, but Ted used anecdotal data when forming his decision.
• C)Tom relied on the representativeness heuristic when making his decision, whereas Ted relied on the availability heuristic.
• D)Neither Tom nor Ted fully considered other cities, so both their judgments were guided by the conjunction fallacy.

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Definitions:

Competition

The rivalry between businesses or individuals striving for the same customers or market.

Monopoly Power

The ability of a single entity to control or dominate an industry or sector, limiting competition.

Antitrust Violation

An offense that occurs when business practices harm competition or create a monopoly, contrary to laws designed to promote fair competition in the market.

Market Share

The percentage of an industry's total sales that is earned by a particular company over a specific time period.