The Circular Flow Model Assumes

question 9

Multiple Choice

The circular flow model assumes:

• A) businesses and households own the factors of production.
• B) businesses own the factors of production.
• C) government owns the factors of production.
• D) households own the factors of production.
• E) firms, households, and the government own the factors of production.

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Definitions:

Selling Price

The amount a buyer pays to purchase a product or service from a seller.

Variable Expense

Costs that vary depending on a company's production volume or activity level.

Target Profit

The anticipated profit figure set by a business for a given period, often guiding pricing and production decisions.

Monthly Fixed Expense

Expenses that do not vary with production volume or business activity level, incurred on a monthly basis.