Only a cause-and-effect relationship,not merely correlation,establishes an economically plausible relationship between the level of an activity and its costs.

Question

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A cause-and-effect relationship establishes a direct link between two variables, indicating that one variable affects the other. In the context of economics, this means that a change in the level of an activity will have a direct impact on its costs. Correlation, on the other hand, only indicates a statistical relationship between two variables but does not necessarily imply causation. Therefore, only a cause-and-effect relationship can establish an economically plausible connection between the level of an activity and its costs.

Only a Cause-And-Effect Relationship,not Merely Correlation,establishes an Economically Plausible Relationship