Economists Make Assumptions to

question 148

Multiple Choice

Economists make assumptions to

• A)provide issues for political discussion.
• B)make a complex world easier to understand.
• C)make it easier to teach economic concepts and analysis.
• D)create policy alternatives that are incomplete or subject to criticism.

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Definitions:

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest, showing the profitability from regular business operations.

Average Operating Assets

The average amount of assets used during a period to generate operating income, useful in evaluating asset efficiency.

ROI

Return on Investment, a measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of the investment.

Residual Income

Residual income is the income that exceeds the minimum rate of return or cost of capital, often used in performance measurement and executive compensation.