Which of the Following Is a Feature of a Good

question 82

Multiple Choice

Which of the following is a feature of a good theory?

• A) A good theory does not rely on data.
• B) A good theory cannot be tested with data.
• C) A good theory is free from approximations.
• D) A good theory closely predicts actual behavior.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered.

Marginal Analysis

The examination of the benefits and costs of an additional unit of consumption or production to make decisions on allocations of resources.

Risk Aversion

The behavior of preferring to avoid loss rather than making a gain, reflecting a preference for certainty over uncertainty.

Irrational Decision

A choice made that contradicts logical reasoning, often influenced by emotional factors or cognitive biases.