A Theory Is Parsimonious If It

question 44

Multiple Choice

A theory is parsimonious if it:

• A) can predict behavior accurately.
• B) contains few assumptions.
• C) is testable.
• D) is able to stimulate research.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, or loan payments.

Units

In the context of inventory or production, refers to the individual items or components that can be counted or measured.

Break-Even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain, and the business is breaking even.

Contribution Margin

The contribution margin represents the portion of sales revenue that is not consumed by variable costs and can contribute to covering fixed costs and generating profit.