A Parsimonious Theory Is One That

question 8

Multiple Choice

A parsimonious theory is one that

• A) does not generate testable hypotheses.
• B) is expressed in precise, mathematical terms.
• C) can account for the available data in the fewest possible terms.
• D) is falsifiable.

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Definitions:

Negative Externalities

A situation where a third party suffers from a decision or action made by others, typically not reflected in the market price.

Positive Externalities

Benefits enjoyed by third-party individuals or the society at large, which result from an economic activity but are not reflected in the market prices.

Negative Externality

An external effect of a product or activity that imposes a negative impact on a third party or the environment.

Internalize

The process of taking into account the external effects of economic actions, such as externalities, within the decision-making process.