According to the Circular-Flow Diagram, GDP Can Be Computed as

question 54

Multiple Choice

According to the circular-flow diagram, GDP can be computed as

• A)either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.
• B)the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production.
• C)payments firms make to factors of production but not as revenues they receive from the sales of goods and services.
• D)neither the revenue firms receive nor the payments they make to factors of production.

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Definitions:

Marginal Cost

The expenditure involved in the production of one more unit of a product or service.

Fixed Cost

Costs that do not vary with the level of output produced, such as rent, salaries, and insurance premiums.

Cartel

A group of independent market participants who collude to increase prices and limit output in order to maximize their collective profits.

Marginal Cost

The hike in cost resulting from the creation of one more unit of a product or service.