Suppose That a Particular Theory Predicts That on Sunny Days

question 77

Multiple Choice

Suppose that a particular theory predicts that on sunny days consumption of ice cream will rise and that on cloudy days consumption of ice cream will fall. If an economist tests this theory and finds that over a six- month period the theory predicts accurately, the economist would likely say

• A)the evidence fails to reject the theory.
• B)the theory has been proven correct.
• C)the theory is always reliable.
• D)that the theory is not useful because consumption involves irrational human behaviour.
• E)the theory shouldn't be taken seriously.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Wasting Assets

Resources that decrease in value over time due to physical deterioration or depletion, such as minerals, oil reserves, or patents.