In the Simple Circular Flow Model

question 1

Multiple Choice

In the simple circular flow model:

• A)households are demanders of factors of production.
• B)businesses are suppliers of final products.
• C)households are suppliers of final products.
• D)there are real flows of goods, services, and factors, but not money flows.

Appreciate the implications of the indifference principle on labor markets and asset mobility.

Comprehend the reasons behind the profitability and lack thereof in competitive and monopolistic markets.

Understand the concept of compensating wage differentials and factors affecting workers' choice of employment.

Grasp the dynamics of housing market prices in response to environmental policies and city planning decisions.

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Definitions:

Toxins

Harmful substances produced by living organisms, including plants, animals, fungi, and bacteria, that can cause disease or damage when absorbed or ingested by others.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome.

Cultural Hazard

Risks to health or safety arising from the cultural practices, beliefs, or societal norms of a group.

Floods

Natural disasters characterized by the overflow of water that submerges land usually dry under normal conditions, often due to heavy rainfall or the melting of snow.