Which of the following examples would most likely be subject to survivor bias?
A. a study that randomly sampled first-year law-school students to see how many survived to make it to their second year in law school
B. a study that randomly sampled men and women who suffered food poisoning from dining at a specific fast-food restaurant chain to determine the incidence of continued patronage of that particular chain of restaurants
C. a study that randomly sampled an equal number of 40-year old men and 60-year old men to measure incidences of Type 1 diabetes
D. a study that randomly sampled flood victims whose homes were destroyed to see if they were likely to rebuild their homes on the same property
Answer: C
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X-inefficiency implies:
a. the practice of using less than the optimal amount of inputs for production. b. the practice of using the lowest quantity of input to produce maximum output. c. always producing less than the optimal amount of output. d. excessive use of inputs relative to best-practice methods.
According to the textbook, if a wave of pessimism cause stocks to become generally overvalued, the best investment strategy is to
A. sell as many stocks as possible. B. continue to diversify your investment portfolio. C. buy only government bonds. D. hold all available stocks and sell them later.