Which of the following best illustrates the fallacy of composition?
A) If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods.
B) If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.
C) If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected.
D) Aggregate consumption may not behave in the same manner as the consumption of a particular individual.

Question

Quizplus · Accepted Answer

The fallacy of composition occurs when one assumes that what is true for an individual is also true for a group. In this case, assuming that if one person having more money allows them to buy more goods, then the entire nation having more money would allow everyone to buy more goods, illustrates this fallacy.

Which of the Following Best Illustrates the Fallacy of Composition