An Economic Hypothesis

question 7

Multiple Choice

An economic hypothesis:

• A)can be tested using empirical analysis.
• B)can be tested using normative analysis.
• C)cannot be tested since it is normative in nature.
• D)cannot be tested since it is a positive economic statement.
• E)cannot be tested using empirical analysis.

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Definitions:

P (Price)

The amount of money required to purchase a good or service, determined by the interaction of supply and demand in the market.

Efficient Level

Describes a state where resources are allocated in a way that maximizes productivity or utility with minimal waste.

External Costs

Uncompensated negative effects experienced by others due to an individual or company's actions, not reflected in market prices.

Marginal Damage

The additional harm or cost caused by producing one more unit of a good or service, often used in the context of environmental economics.