How Does the Science of Economics Deal with the Fact

question 313

Multiple Choice

How does the science of economics deal with the fact that we all have different values?

• A) by assuming that values don't play a role in economic behavior
• B) by seeking to discover the sources of different value systems
• C) by using positive analysis
• D) by surveying the public to see what the most common values are, and then incorporating those as assumptions into their models

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Definitions:

Net Price Method

An accounting approach that calculates the cost of goods sold or purchased after deducting any discounts, rebates, or allowances from the gross price.

Gross Price Method

An inventory valuation method that records purchases at the gross invoice price without deducting any cash discounts.

FIFO

FIFO (First-In, First-Out) is an inventory cost valuation method assuming that the oldest items of inventory are sold first and newer inventories last, affecting the cost of goods sold and ending inventory valuation.

LIFO

Last In, First Out, an inventory valuation method that assumes goods purchased last are the first to be used or sold, affecting cost of goods sold and inventory value.