The Following Question Are Based on the Following Circular Flow

question 6

Multiple Choice

The following question are based on the following circular flow diagram:

-In this model of the circular flow,the dollar flows

• A) are clockwise.
• B) are counterclockwise.
• C) on the right side are clockwise and those on the left side are counterclockwise.
• D) on the right side are counterclockwise and those on the left side are clockwise.
• E) on the right side are greater than those on the left side.

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Definitions:

Economies of Scale

The savings businesses gain from operating at a larger scale, where the expense for each unit produced diminishes as the scale enlarges.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability of a firm to adjust to changes in market demand.

Long Run

An economic term referring to a period during which all factors of production and costs are variable, allowing for full adjustment to changes.

Fixed Cost

Costs that do not change with the level of output or sales, such as rent or salaries.