Positive Economic Analysis _____

question 45

Multiple Choice

Positive economic analysis _____.

• A)evaluates policy changes and determines whether it is a good idea
• B)seeks to understand the outcome of a policy change
• C)cannot be proven incorrect
• D)is a statement about "what ought to be"

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Definitions:

Variable Cost

Expenses that fluctuate in direct correlation with the volume of production or business operations.

Contribution Margin Ratio

A financial metric that represents the portion of sales revenue that is not consumed by variable costs and can contribute to covering fixed costs.

Break-Even Point

The point at which total costs equal total revenue, resulting in no profit but also no loss.

Mixed Costs

Expenses that contain both variable and fixed cost elements, changing in total with the level of activity but not in direct proportion.