Positive Economics Is About

question 153

Multiple Choice

Positive economics is about:

• A) verifying and confirming economic policy.
• B) describing, explaining, or predicting economic events.
• C) prescribing and making a claim on the economy.
• D) making recommendations about what economic policy should be.

Comprehend the basis and methods for allocating indirect costs.

Define and differentiate profit center, cost center, and investment center.

Understand and explain the concept of activity-based costing (ABC).

Grasp the purpose and applications of responsibility accounting systems.

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Definitions:

Relevant Range

The range of activity over which changes in cost are of interest to management.

Cost Behavior

Cost behavior refers to how different types of production costs change when there is a change in the level of production activity.

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behavior hold true for a given business.

Management Decision-making

This involves the processes and strategies managers use to make choices that direct the organization towards its goals.