Set 5: Command of Evidence (Intermediate)

Explanation

Answer: C

PASSAGE

Prospect theory shows people fear losses more than they value equivalent gains. Losing $100 feels worse than gaining $100 feels good.

What does prospect theory predict?

A. People are indifferent to gains and losses.

B. Loss aversion: losses hurt more than gains please.

C. People always maximize profit.✓ Correct

D. Emotions play no role in decisions.

Detailed Explanation

This question requires you to identify evidence that supports a claim. 'Fear losses more than they value equivalent gains.' The best evidence directly and explicitly supports the stated claim without requiring assumptions. Match specific textual details or data points to the claim being made. The correct answer provides clear, direct support. Strong evidence directly addresses the claim without requiring additional interpretation. When evaluating options, look for quotes or data that explicitly support the statement. Weak evidence may be tangentially related but doesn't provide direct proof.

Key Evidence:

• "Prospect theory shows people fear losses more than they value equivalent gains"

Why others are wrong: A (This option is incorrect.), B (This option is incorrect.), D (This option is incorrect.).

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