A Positive Theory

question 11

Multiple Choice

A positive theory:

• A)Is based on what should be the case given a certain objective.
• B)Is completely divorced from reality.
• C)Describes,explains or predicts activities.
• D)Only focuses on rewarding activities.

---

Definitions:

Most Efficient Output

The level of production at which a firm operates with the lowest average total cost, achieving optimal efficiency.

Long Run

A period in economic analysis in which all inputs can be adjusted and no factors are fixed.

Perfect Competition

a market structure characterized by a large number of small firms, producing identical products, with no single firm able to influence the market price.

Price Takers

Firms or individuals in a market who accept the prevailing prices as they cannot influence them due to their small market share in highly competitive markets.