Choose the Statement That Best Characterizes an Economic Theory

question 144

Multiple Choice

Choose the statement that best characterizes an economic theory.A valid theory

• A)allows one to deduce a normative statement.
• B)appeals to the law of large numbers.
• C)generates a hypothesis that can predict future events.
• D)extrapolates from the past behaviour of a variable to predict its future course.
• E)allows one to prove irrefutably one's hypothesis.

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Definitions:

Constant Costs

Occur when the cost of producing an additional unit of a good does not change as the scale of production increases or decreases.

Inferior Good

A type of good for which demand decreases as the consumer's income rises, reversing the typical behavior observed with normal goods.

Long-run Equilibrium

A state in which economic forces such as supply and demand are balanced and in the context of production, firms are operating at an efficient scale.

Decreasing-cost Industry

An industry in which production costs fall as the industry expands, often due to economies of scale or technological improvements.