The Process by Which Economists Test Hypotheses Against Facts to Develop

question 319

Multiple Choice

The process by which economists test hypotheses against facts to develop theories, principles, and models is called

• A) the economic perspective.
• B) the scientific method.
• C) policy economics.
• D) microeconomics.

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Definitions:

Period Costs

Costs that are expensed in the period in which they are incurred, not directly tied to the production process.

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes towards covering fixed costs and profit.

Direct Manufacturing Cost

Expenses directly tied to the production of goods, including labor and materials.

Indirect Manufacturing Costs

These are costs that cannot be directly traced to specific units produced, such as maintenance and cleaning, and are part of the manufacturing overhead.