Assumptions for Economic Theories and Models Should Be

question 63

Multiple Choice

Assumptions for economic theories and models should be

• A)rejected if they are not totally realistic.
• B)logical rather than empirically testable.
• C)simple and reasonable rather than complex.
• D)maintained until overwhelming evidence to the contrary occurs.

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Definitions:

Economies of Scale

Cost advantages that enterprises obtain due to scale of operation, with cost per unit of output generally decreasing with increasing scale.

Operating Efficiencies

A measure of how well a company utilizes its resources to produce goods and services, often reflecting in the reduction of costs and improvement in output.

Poison Pill

A strategy employed by companies to prevent or discourage hostile takeovers by making the company less attractive to the would-be acquirer.

Unfriendly Takeover

A takeover bid opposed by the management of the target company.