As the Circular Flow Model Points Out,a Choice That Households

question 190

Multiple Choice

As the circular flow model points out,a choice that households make is how

• A) many resources a firm will hire.
• B) many goods and services are produced.
• C) many goods and services are purchased.
• D) much labor is hired.
• E) much the government will collect in taxes and how much the government will spend on transfer payments.

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Definitions:

Inefficient Use

The allocation or utilization of resources in a manner that does not maximize their potential or economic value.

Resource Prices

The costs associated with acquiring the inputs or factors of production needed to produce goods or services, such as labor, raw materials, and capital.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Law of Diminishing Returns

The principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.