Assume the Market in the Graph Shown Was Originally at an Equilibrium

question 34

Multiple Choice

Assume the market in the graph shown was originally at an equilibrium with demand D and supply S. The original equilibrium price and quantity were, respectively:

• A) $5 and 30.
• B) $5 and 20.
• C) $10 and 20.
• D) $20 and 10.

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Definitions:

False Consensus Effect

The tendency for people to overestimate the extent to which their beliefs, opinions, preferences, values, and habits are normal and typical of those of others.

Counterfactual Thinking

The human tendency to create possible alternatives to life events that have already occurred, something akin to imagining "what might have been."

Availability Heuristic

A cognitive bias wherein individuals judge the probability of events based on how easily examples come to mind.

Representativeness Heuristic

A cognitive shortcut that involves making judgments about the probability of an event under uncertainty, based on how much it resembles the typical case.