In the Circular Flow Model of an Economy with No

question 135

Multiple Choice

In the circular flow model of an economy with no government sector and no international trade, households

• A) receive income from buyers of goods and services.
• B) pay firms for the use of their factors.
• C) receive income from the sale of factors in the goods markets.
• D) receive income from producers for the use of factors in the factor markets.

Comprehend the principles of incremental cash flow analysis in capital budgeting decisions.

Realize the role of sunk costs and their irrelevance to future cash flow estimations.

Understand the concept and implications of sunk costs in capital budgeting decisions.

Recognize and incorporate opportunity costs in project cash flow analyses.