Which of the Following Statements About Economic Methodology Is Correct

question 68

Multiple Choice

Which of the following statements about economic methodology is correct?

• A)An economic law is a cause-and-effect relationship that has been verified by a controlled experiment.
• B)The test of a theory's validity is its usefulness in explaining reality.
• C)An economic law is a statement about group behavior that is based on the observed behavior of a single individual.
• D)An economic law, because it is based on probabilities, can only be expected to be true about half the time.
• E)Assumptions are ignored in the development of hypotheses.

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Definitions:

Contribution Margin Ratio

The contribution margin ratio is the percentage of revenue that exceeds total variable costs, indicating how much of the sales revenue is available to cover fixed costs and generate profit.

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in monetary units.

After Tax Profit

The net income a company retains after deducting all taxes owed to the government.

Income Tax Rate

The percentage of an individual or corporation's income that is paid to the government as tax.