Some Mental Shortcuts Can Cause Errors in Thinking

question 16

Multiple Choice

Some mental shortcuts can cause errors in thinking.For example,simply because a piece of information is remembered easily does not mean that the best decision is based on that information.This error in thinking reflects

• A) an analogy.
• B) insight.
• C) the availability heuristic.
• D) the representativeness heuristic.

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Definitions:

Balance Sheet

A financial statement that provides an overview of a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial document that shows a company's revenues and expenses over a specific period, illustrating profitability.

Working Capital Ratio

The amount of current assets that would remain if all a company’s current liabilities were paid immediately; total current assets / total current liabilities.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.