Which of the following statements best illustrates the fallacy of composition?
A) If the price of a product increases, the quantity of the product supplied will decline, ceteris paribus.
B) The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation.
C) Resources are scarce; therefore, there is no such thing as a free lunch.
D) If I talk loudly at a party, I have a better chance of being heard by my listeners; if everyone at the party talks loudly, everyone can be heard more clearly.
E) If the price of a product increases, the quantity of the product supplied will increase, ceteris paribus.
Correct Answer:
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