FAST Critical Thinking and Decision Making 4 — Questions and Answers
Question 1: A supervisor notices that every time a new employee joins the team, productivity drops for two weeks. She concludes that new employees cause productivity loss. What logical flaw does this reasoning contain?
- Correlation is mistaken for causation (Correct answer)
- The sample size is too large
- The conclusion is based on future events
- The supervisor ignored contradictory evidence
Correct answer: Correlation is mistaken for causation
Observing that two things occur together does not prove one causes the other — a classic correlation-causation error.
Question 2: You must choose between Project A (guaranteed $50,000 gain) and Project B (60% chance of $100,000, 40% chance of $0). Which statement best describes the rational decision framework?
- Project A is always the better choice because it eliminates risk
- Project B has a higher expected value and may be preferred depending on risk tolerance (Correct answer)
- Project B is always superior because the potential gain is larger
- Neither project can be evaluated without knowing the time frame
Correct answer: Project B has a higher expected value and may be preferred depending on risk tolerance
Expected value of B is $60,000 vs. $50,000 for A, but rational choice also weighs risk tolerance and context.
Question 3: A manager receives a report showing that sales declined in Q3. Before drawing conclusions, which type of information is most critical to obtain first?
- The names of the sales representatives involved
- Baseline or comparative data from prior periods and industry trends (Correct answer)
- The marketing budget for Q4
- Customer satisfaction scores from Q1
Correct answer: Baseline or comparative data from prior periods and industry trends
Without comparative context, a single data point cannot indicate whether the decline is unusual or significant.
Question 4: An analyst argues: 'Our top competitor lowered prices, so we must lower ours too.' Which critical thinking error is most evident?
- False dilemma — assuming only one response is possible (Correct answer)
- Ad hominem — attacking the competitor personally
- Slippery slope — assuming one change leads to disaster
- Circular reasoning — the conclusion repeats the premise
Correct answer: False dilemma — assuming only one response is possible
Assuming price-cutting is the only valid response ignores alternatives like improving value, targeting new segments, or differentiating the product.
Question 5: During a group decision meeting, every team member quickly agrees with the leader's first proposal without raising concerns. This phenomenon is best described as:
- Confirmation bias
- Groupthink (Correct answer)
- The halo effect
- Anchoring bias
Correct answer: Groupthink
Groupthink occurs when the desire for group harmony suppresses critical evaluation and dissenting views.
Question 6: A decision-maker uses only the first piece of information received to evaluate all subsequent data. This is an example of which cognitive bias?
- Availability heuristic
- Anchoring bias (Correct answer)
- Sunk cost fallacy
- Representativeness heuristic
Correct answer: Anchoring bias
Anchoring bias occurs when an initial piece of information disproportionately influences all later judgments.
Question 7: A team has invested $200,000 in a project that is now clearly failing. Some members argue they must continue because of money already spent. What fallacy is this?
- Sunk cost fallacy (Correct answer)
- Opportunity cost error
- Risk aversion bias
- Escalation heuristic
Correct answer: Sunk cost fallacy
Money already spent cannot be recovered and should not drive future decisions — only future costs and benefits matter.
FAST Critical Thinking and Decision Making 4
A supervisor notices that every time a new employee joins the team, productivity drops for two weeks.
She concludes that new employees cause productivity loss.
What logical flaw does this reasoning contain?