Exhibit 1.2 -Refer to the Circular-Flow Model in Exhibit 1.2. Households Supply

question 2

Multiple Choice

Exhibit 1.2

-Refer to the circular-flow model in Exhibit 1.2. Households supply ________ to firms through resource markets.

• A) goods and services
• B) products
• C) labor, capital, natural resources, and entrepreneurial ability
• D) guidance
• E) wages, interest, rent, and profit

---

Definitions:

Marginal Product

The additional output that is produced by adding one more unit of a specific input, keeping all other inputs constant.

Efficiency Wage

A theory proposing that higher wages lead to increased productivity and efficiency among workers by attracting better applicants, reducing turnover, and increasing worker effort.

Wage Disparity

The difference in wages earned by different groups of people, often segmented by gender, race, or education level.

Human Capital

The economic value of an individual's experience and skills.