Assume that an analyst at a leading business daily observes an increase in productivity across industries which announced healthy annual bonus for their employees. This leads him to conclude that productivity is directly related to the incentive scheme followed by companies. The analyst however ignored the increase in capital per worker ratio and other technological developments in these
companies which also affected productivity. This error in reasoning is related to:
a. bounded rationality.
b. selection bias.
c. representative heuristics.
d. availability heuristics.
B
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The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?
A) 0 chocolate bars and 100 cans of cola B) 20 chocolate bars and 80 cans of cola C) 32 chocolate bars and 40 cans of cola D) 38 chocolate bars and 0 cans of cola
All but the most primitive societies use money as a medium of exchange, implying that
A) the use of money is economically efficient. B) barter exchange is economically efficient. C) barter exchange cannot work outside the family. D) inflation is not a concern.
All of the following are true regarding tacit collusion except which one?
A) It is more likely when barriers to entry are high. B) It is more likely when the price elasticity of demand is large. C) It is an informal, unstated agreement. D) It harms buyers.
The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities
a. True b. False