A Critical Assumption Differs from a Simplifying Assumption in That

question 127

Multiple Choice

A critical assumption differs from a simplifying assumption in that a critical assumption

• A) is a means of getting rid of extraneous details in the model
• B) cannot affect the conclusions of the model
• C) can affect the conclusions of the model
• D) is rarely used in economic models
• E) is never a fundamental assumption

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Definitions:

Responsibilities Delegated

Tasks or duties assigned to a subordinate or team member by a person with authority or leadership within an organization.

Transfer Price

The price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments.

Variable Cost

Costs that vary directly with the level of production or service volume, such as materials and labor.

Per-unit Market Price

The current price at which an individual unit of a product is sold in the market.