Question

1.Our probability judgments go astray for a number of reasons, including all except which of the following?

A.People believe that they exert control over purely chance events.

B.Generalizations are made on the basis of small sample findings.

C.Emphasis on "causation" results in the underweighing of evidence that is relevant.

D.We forget to take the "law of averages" into account.

2.Which of the following is not a problem with the assumption of rational utility maximization?

A.Few people are good at estimating probabilities.

B.People are irrational and inconsistent when weighing choices.

C.Many consumer markets are monopolies or oligopolies.

D.None of the above.

3.According to the contract view of business' duties to customers:

A.at least one of the parties to the contract must have full knowledge of the nature of the agreement.

B.Kant's arguments concerning morality are not justifiable.

C.neither party to a contract must be forced to enter the contract under duress or undue influence.

D.a business may only misrepresent the facts when it will be in the customer's best interests.

Answer 1

1) Option A states that people tries everything to make an event, which is completely dependent on chance, correct. which is one of the reasons for judgments to go astray as what ever is the control of effort, a completely chance dependent event can go against the decision any time.

Option B states that decisions are based on getting facts from smaller group and then generalizing over the bigger mass, which is also one of the reasons for probability judgments to go astray as smaller group some time may not possess all the characteristics of larger group and hence decision based on those characteristics may prove wrong for bigger mass

Option C states that making correlation between many evidences, sometimes lead us taking a false decision because in interlinking we some time forget the important event.Hence this also leads to astray of probability judgement.

Option D, is actually an important tool that makes the probability decisions go less astray and hence it is not the reason for going judgement astray and hence is the correct answer.

2) Utility maximization model based on the efficient allocation of consumer's money and hence one of the assumptions of rational utility maximization assumes that consumers are rational and their priority is to get the maximum value from their money.Hence option B, which states that people are irrational and inconsistent in weighing choices, is wrong option. Utility maximization model also assumes that people have enough capabilities to estimate chance of purchasing and they also have enough options of goods and services for purchase and therefore option A and option C are wrong options.

3) According to contract view of business' duties to customers, all parties should have full knowledge of the contract to avoid any future misunderstanding and disputes, hence option A is wrong.Also, non of the parties should enter the contract by any influence or force as it would lead to falsification of information and hence option C is right answer. For Option B, there is no enough information provided. Option D states that business can misrepresent the facts based on customer's best interests, which is a wrong statement as business should never misrepresent the facts, hence option D is wrong. b