A Positive Theory

question 8

Multiple Choice

A positive theory

• A) Is completely divorced from reality
• B) Describes, explains or predicts activities
• C) Is based on what should be the case given a certain objective
• D) Only focuses on rewarding activities

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Definitions:

Purely Competitive

Describes a market structure characterized by many sellers and buyers, where no single entity has the power to influence the market price.

Positive Economic Profits

Profits that exceed the opportunity costs of a production enterprise, indicating a more favorable outcome than alternative investments.

Economic Losses

Occur when a company's total costs exceed its total revenues, indicating a negative outcome from business operations.

Representative Firm

A representative firm is a hypothetical entity in economic models used to represent the typical characteristics of firms within a particular industry or market.