According to the Principle of Parsimony, We Should Prefer the Theory

question 138

Multiple Choice

According to the principle of parsimony, we should prefer the theory that

• A) is most popular among the population as a whole.
• B) makes fewer or simpler assumptions.
• C) fits any data that we could possibly imagine.
• D) relies on anecdotal evidence.

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Definitions:

Profitability

A measure of the efficiency and effectiveness of a company's operations, indicated by its ability to generate income relative to revenue, assets, equity, or other financial metrics.

Demand Uncertainty

Refers to the unpredictability of customer demand for a product or service, making it difficult for companies to accurately predict sales volumes.

Supply and Demand

A fundamental economic model describing the interaction between the availability of a product and the desire for that product by consumers.

Overstocking

The situation where a business holds more inventory than is demanded by the market, leading to unnecessary storage costs and potential wastage.