The Use of Theory and Observation Is More Difficult in Economics

question 125

Multiple Choice

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

• A)performing an experiment in an economic system.
• B)applying mathematical methods to economic analysis.
• C)analyzing available data.
• D)formulating theories about economic events.

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Definitions:

Government Regulations

Laws and rules established by governmental agencies to control or modify economic behavior, protect consumers, or preserve natural resources.

Resource Prices

The cost of inputs used in the production of goods or services, such as raw materials, labor, and energy.

Sunk Costs

Costs that have already been incurred as a result of past decisions. They are sometimes referred to as historical costs.

Variable Costs

Expenses that fluctuate in direct proportion to the level of output or production activity.