Normative Economics

question 39

Multiple Choice

Normative economics

• A)is concerned with value judgments.
• B)involves objective attempts to explain economic relationships.
• C)is concerned with cause-effect relationships.
• D)relates to observations that can be proved.

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Definitions:

FIFO

Stands for First In, First Out, an inventory valuation method where goods purchased or produced first are sold or used first.

Gross profit

The difference between revenue and the cost of goods sold (COGS), representing the profit made before deducting operating expenses.

Net income

The profit of a company after all revenues, costs, and expenses have been subtracted, indicating the actual earnings.

Periodic inventory system

An inventory accounting system where updates to inventory levels are made on a periodic basis, rather than each time a sale or purchase occurs.