Normative Economics Is Concerned with

question 163

Multiple Choice

Normative economics is concerned with

• A) value judgments.
• B) opinions.
• C) cause-effect relationships.
• D) observations that can be proved.
• E) both a and b

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Incremental Cash Flow

The additional cash flow from taking on a new project, calculated as the difference between the project's cash flows if the project is taken versus if it is not.

Incremental Cash Flow

The additional cash flow a company receives from undertaking a new project, considering the revenue and costs involved.