In the Circular Flow Diagram, Firms Get Their Ability to Pay

question 44

Multiple Choice

In the circular flow diagram, firms get their ability to pay for the costs of production from the

• A)revenues they receive for their products.
• B)resources they acquire in the resource markets.
• C)incomes they earn for their resources.
• D)goods and services they get in the product markets.

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Definitions:

Direct Labour

The workforce directly engaged in producing goods or delivering services, distinct from indirect labor involved in supportive roles.

Materials Standards

Materials Standards define the quality, size, and composition specifications that materials used in production must meet to ensure consistent product quality.

Labour Hours

Labour hours refer to the total number of hours worked by employees, typically used to measure workforce output or allocate direct labor costs in manufacturing.

Materials Quantity Variance

This measures the difference between the actual amount of materials used in production and the standard amount expected to be used, based on the level of output.