In the Circular Flow Model of an Economy, Households

question 61

Multiple Choice

In the circular flow model of an economy, households

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

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Definitions:

Swords

Weapons with a long, edged blade used for cutting, thrusting, or as a ceremonial symbol.

Marginal Cost

Incremental cost incurred when one more unit of a product or service is produced.

Total Variable Cost

The sum of expenses that change in proportion to the activity or volume of production.

Average Variable Cost

The total variable costs divided by the quantity of output produced; it fluctuates with changes in output.