Value Is Created When

question 19

Multiple Choice

Value is created when:

• A)The price that the customer is willing to pay for a product exceeds the firm's direct cost of production
• B)The surplus of value is distributed between customers and producers in the industry by the forces of competition
• C)The value of a product to consumers is more than they paid for it.
• D)The price that the customer is willing to pay for a product exceeds the firm's cost.

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Definitions:

MPS

The marginal propensity to save, which is the fraction of additional income that is saved.

Disposable Income

The fiscal envelope for household spending and saving activity subsequent to income tax adjustments.

Consumption

The purchase and use of goods and services by households, considered a primary component of economic activity and an indicator of the economic health of a nation.

Saving

The act of not consuming all of one's income and instead holding onto it for future investments or expenditure needs.