Consider the Following Data on the Prices of Three Items,A,B,and

question 114

Multiple Choice

Consider the following data on the prices of three items,A,B,and C,from 2000 through 2002. Compute the unweighted price index for the three items for 2000,using 2001 as the base year.

• A) 100.08
• B) 98.56
• C) 100.85
• D) 99.92

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Definitions:

Representativeness Heuristic

A mental shortcut that involves judging the likelihood of an event or situation by comparing it to an existing prototype that already exists in our minds.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses.

Mental Sets

A tendency to solve problems using methods that have worked in the past rather than considering new approaches.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving.