Which of the following best illustrates the fallacy of composition?
A) If the price of bread rose, consumers would buy less; if consumers bought less, the price of bread would rise.
B) If Mr. Lewis produces more, he can consume more; if Mr. Lewis consumes more, he can produce more.
C) If prices of houses went down, more people could afford houses; and if more people bought houses, the prices of houses would increase.
D) If Mr. Lewis had more money, he would be wealthier; if a nation's money supply were larger, the people of the nation would be wealthier.

Question

Quizplus · Accepted Answer

The fallacy of composition is the error of assuming that what is true of a member of a group is true for the group as a whole. Choice D illustrates this fallacy by suggesting that if an individual having more money makes them wealthier, then a larger money supply for a nation would make its people wealthier, ignoring the potential for inflation and other macroeconomic factors that affect wealth at the national level.

Which of the Following Best Illustrates the Fallacy of Composition