An Economic Theory

question 5

Multiple Choice

An economic theory:

• A)should be as detailed as possible in order to model the complexity of an economy.
• B)is an abstraction from reality.
• C)is only useful if it is based on assumptions and mathematical calculations.
• D)should be based on observable facts and events
• E)is based on controlled experimentation

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Definitions:

Direct Labor

The wages of those persons whose efforts directly affect the quality or other characteristics of the products manufactured.

Raw Materials

Basic materials used in the manufacturing process to produce finished goods, not yet processed or used in production.

Selling And Administrative Costs

Expenses related to the selling of products and the administrative aspects of a business, excluding production costs.

Direct Labor Costs

The expenses that a company incurs through the wages paid to workers directly involved in manufacturing goods or providing services.