"If Tom had twice as much money, he could consume twice as much. If everyone had twice as much money, they could consume twice as much." This quote illustrates
A) the difference between positive and normative economics.
B) the fallacy of composition.
C) that association is not causation.
D) the law of unintended consequences.

Question

Quizplus · Accepted Answer

The quote illustrates the fallacy of composition, which is the erroneous belief that what is true for an individual is also true for a group. While Tom could consume twice as much with twice the money, if everyone had twice as much money, prices might rise, and consumption might not double.

"If Tom Had Twice as Much Money, He Could Consume