Which of the following best illustrates the fallacy of composition?
A) If Mr. Ahmad had more money, he would buy a new car; if he had a new car, he would have less money.
B) If Mr. Mua had more money, he could buy more goods; if the Mua family had more money, it could buy additional goods.
C) If Ms. Smith had more money, she would buy her children more gifts; if her children had more gifts, they would be happier.
D) If Ms. Shiflet had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.

Question

Quizplus · Accepted Answer

The fallacy of composition occurs when it is assumed that what is true of the parts is also true of the whole. The example in choice D implies that if individuals have more money, they can buy more scarce goods, and therefore, if the whole nation has more money, everyone can buy more scarce goods. However, this overlooks the fact that resources are limited, and an increase in demand for scarce goods will drive up prices, making them even more difficult to obtain for some individuals. Therefore, the assumption that everyone can buy more scarce goods with an increase in national wealth is a fallacy of composition.

Which of the Following Best Illustrates the Fallacy of Composition