The Fallacy of Composition
What will be an ideal response?
You commit the "fallacy of composition" if you incorrectly assume that what is true for the individual is true for the whole.
Example 1
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In the above figure, at what minimum wage is the unemployment level equal to 200 million hours?
A) $2 per hour B) $4 per hour C) $6 per hour D) $8 per hour
A cigar factory employs 20 workers and produces 1,000 cigars a day. The company reduces the workforce to 19 workers and produces 912 cigars a day. The 20th worker:
A. had a marginal product of 88 cigars. B. caused average product to fall. C. must have had a lower marginal product than the 19th worker. D. All of these are true.
Which of the following statements is true of direct to consumer advertising (DTCA)?
a. There is a positive correlation between a drug's price and the amount of DTCA practiced. b. DTCA increases pharmaceutical profits but does little to improve consumer welfare. c. The majority of pharmaceutical spending on advertising is focused on the patient. d. DTCA attracts more patients to consider using the product who might not have known about the drug. e. Pharmaceutical advertising does little to educate patients. Its sole purpose is to promote product use.
Figure 10.3 describes the labor market for a manufacturing industry. In the short run, an increase in the productivity of the workers will:
A. cause the equilibrium wage and the hours of labor used to increase. B. not have an effect on this market. C. cause the equilibrium wage to increase but will not change the hours of labor used. D. cause the equilibrium wage to increase and the hours of labor used to decrease.