Why Do Economists Test Their Hypotheses

question 222

Multiple Choice

Why do economists test their hypotheses?

• A) to see whether people are motivated by self-interest
• B) to see whether their models predict the choices people will make
• C) to determine whether government policies have effectively achieved their goals
• D) to learn what people are thinking when they make the choices they do

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Definitions:

Invoice Price

The initial quoted price on an invoice prior to deductions such as discounts, allowances, or rebates.

Discount Period

refers to the time frame in which a sales discount is available to a customer, encouraging prompt payment.

Perpetual Inventory Method

An accounting approach that records inventory purchases and sales in real-time through direct changes in inventory and cost of goods sold accounts.