"As soon as a mayor announced his/her 'get tough on crime' policy on New Year's day, criminals got scared and the crime rate went down." Suppose that the lower crime rate was actually caused by freezing cold temperatures in January?it was just too cold for anybody to be out robbing other people. Which fundamental hazard of the economic way of thinking did the mayor make?
A. believing that what's good for one person is good for the whole group (the fallacy of composition)
B. failing to take into account the benefits of crime (the payoff fallacy)
C. believing that association is the same as causation
D. failing to understand the difference between positive and normative economics.
Answer: C
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If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?
A) the monopoly price and output B) the competitive price and output C) the monopolistically competitive price and output D) a price higher than the monopoly price and, because there is more than one firm in the industry, more output than the monopoly amount E) a price lower than the competitive price and, because there are only a few firms in the industry, less output than the competitive amount
If Australia has more land per worker, and Belgium has more capital per worker,then if trade began between these two countries
A) the real income of landowners in Belgium would decline. B) the real income of capital owners in Australia would increase. C) the real income of labor in Australia would decline. D) the real income of labor in Belgium would decline. E) the real income of labor in both countries would decline.