Economists Build Models That Abstract from the Complexities of Reality

question 9

Multiple Choice

Economists build models that abstract from the complexities of reality because

• A)the complexities of reality are unimportant.
• B)it is easier to do so.
• C)economists do not understand the real world.
• D)they believe they gain a greater understanding of reality.
• E)economists are not interested in reality.

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Definitions:

Use Of Assets

This involves the effective and efficient employment of a company's resources to maximize profitability and productivity.

Profit Margin

A financial performance metric that shows the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company in generating profits.

Operating Income

The profit realized from a business's core operations, calculated by subtracting operating expenses from gross profit.

Profit Margin

A financial metric indicating the percentage of revenue that remains as profit after deducting expenses.