Economic Theory

question 15

Multiple Choice

Economic theory

• A) is a set of definitions, postulates, and principles assembled in a manner that helps make cause-and-effect relationships clear in economics.
• B) is like a guidebook in that it points out what to look for.
• C) provides economists with a common language and way of thinking about how the world works.
• D) is all of the above.

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Definitions:

Break-Even Point

The point at which costs or expenses and revenue are equal, resulting in no net loss or gain from a business or investment.

Variable Cost

Variable cost is the cost that changes in direct proportion to the volume of output or activity in production, services, or other cost-incurred activities.

Fixed Costs

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

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.