Economists Use Theories to Explain Economic Phenomena

question 22

Multiple Choice

Economists use theories to explain economic phenomena.How do these theories relate to reality?  

• A) Theories involve some simplification of reality. 
• B) Theories bear no relation to reality. 
• C) Theories approach reality in all its complexity. 
• D) Theories involve so much distortion of reality that it is worthless.

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Definitions:

Return on Total Assets

A profitability ratio that measures net income produced by total assets within a period.

Financial Information

Data that pertains to the financial status, performance, and changes in financial condition of an entity.

Days' Sales Uncollected

A measure of how quickly a company converts its accounts receivable into cash, indicating the average number of days sales remain uncollected.

Financial Information

Data concerning the financial status or operations of an entity, including statements and transactions.