Which of the Following Is an Example of a Normative

question 21

Multiple Choice

Which of the following is an example of a normative statement?

• A) the quantity supplied of a good will fall if the price falls
• B) reducing pollution is too important to worry about the costs
• C) technological progress will increase the potential growth rate of the economy
• D) none of the above are normative statements

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Definitions:

Gross Margin

Gross Margin is the difference between sales revenue and the cost of goods sold, expressed as a percentage of sales, indicating the efficiency of production and pricing.

Contribution Margin Income Statement

An income statement format that separates variable costs from fixed costs, focusing on contribution margin.

External Reporting

The provision of financial and non-financial information to external stakeholders, such as investors, creditors, and regulatory agencies, usually formal and standardized.

Fixed Manufacturing Costs

Expenses that do not change with the level of production, including things like rent for factory space and salaries of permanent staff.