A Theory Is an Abstraction Used Often by Economists to

question 16

Multiple Choice

A theory is an abstraction used often by economists to

• A)describe a problem.
• B)keep all assumptions in their proper places.
• C)explain why things work the way they do.
• D)describe a hierarchical ordering of facts.
• E)arrange variables into a graphical format.

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Definitions:

Value of Resources

The worth or utility of resources based on their ability to contribute to production or satisfy needs.

Competitive Market

A market structure characterized by a large number of sellers and buyers, where no single entity can influence the market price.

Economic Profits

A recalculated measure of return on investment that includes both visible and hidden costs, indicating real profitability over and above all expenses.

Goods Value

Goods value represents the importance, worth, or usefulness of a product or service to buyers, often determined by its price, quality, and utility.