Which of the following best illustrates the fallacy of composition?
A) If the price of a product rises, the quantity produced will decline.
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 Susan had more money she could buy more. If everyone had more money they could buy more.

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, while Susan having more money might allow her to buy more, if everyone had more money, it could lead to inflation, negating the increased purchasing power.

Which of the Following Best Illustrates the Fallacy of Composition