The Scientific Purpose of Simplifying Assumptions in an Economic Model

question 60

Multiple Choice

The scientific purpose of simplifying assumptions in an economic model is to

• A)avoid confronting difficult issues.
• B)eliminate the need for further testing of the implications of the model.
• C)abstract from the complexities of the real world those issues that are not important for the issues under examination.
• D)eliminate the possibility of personal bias in the model.
• E)add necessary hypotheses to the problem.

Understand how investment decisions and profit margins influence the overall performance of responsibility centers.

Understand the concept of controllable expenses and their impact on profitability.

Grasp the limitations of using operating income as a single measure of performance.

Comprehend the distinct functions and responsibilities of a profit center manager with respect to asset investments.

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Definitions:

Syntactic

Pertaining to syntax, the set of rules, principles, and processes that govern the structure of sentences in a language.

Babbling

A stage in child language acquisition, where infants produce sounds of varied combinations, exploring their phonetic range.

Telegraphic Speech

A stage in language development where children speak in short, simple combinations of words, omitting smaller parts of speech.

Semantics

Semantics is the study of meaning in language, including the analysis of words, phrases, signs, and symbols and their relation to what they stand for or represent.