The fallacy of composition is:
a. the erroneous view that an economic activity can sometimes exceed the sum of its components
b. the erroneous view that what is true for the individual will also be true for the group.
c. the view that the aggregation of economic activity will necessarily lead to an outcome that is different than the outcome generated by each individual in the group.
d. the idea that association need not imply causation.
b
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When the price of peaches went up, people bought fewer peaches and more strawberries. This is an indication that tastes have changed as a result of the price increase.
Answer the following statement true (T) or false (F)
When consuming a good creates positive externalities,
a. private demand increases b. private demand decreases c. the private demand curve overstates the marginal social benefit of the good d. the private demand curve understates the marginal social benefit of the good e. the equilibrium quantity increases without government intervention
Imagine that Wingate National is a new bank, and that the legal reserve requirement is 10 percent. If it accepts a $1,000 deposit, then it alone can increase the money supply by
a. $900 b. $910 c. $1,000 d. $9,000 e. $10,000
If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?
A. ½. B. 2. C. 20. D. 10.