Which of the Following Is Not True About the Cause-And-Effect

question 191

Multiple Choice

Which of the following is not true about the cause-and-effect criterion when estimating a cost function?

• A) Correlation of variables proves cause-and-effect
• B) Managers must be careful not to equate high correlation between two variables to mean that either variable causes the other
• C) Knowledge of operations can help managers discover cause-and-effect relationships
• D) Contractual arrangements may show a direct cause and effect between two variables

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Capital Stock

The total value of all physical assets owned by a company that are used in producing goods and services.

Interest Rate

The percentage charged or paid for the use of money, typically expressed as an annual rate on loans or earned on deposits.

Investing

Allocating fiscal resources with the foresight of making an income or profit.