In the Circular-Flow Diagram

question 192

Multiple Choice

In the circular-flow diagram,

• A)firms are buyers in the markets for goods and services.
• B)households are sellers in the markets for the factors of production.
• C)firms are sellers in the markets for factors of production and in the markets for goods and services.
• D)dollars that are spent on goods and services flow directly from firms to households.

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Definitions:

Fixed Costs

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

Units Produced

The number of complete items manufactured or produced within a given timeframe.

Cash Discount

A reduction in the invoice price offered by sellers to buyers as an incentive for early payment before the established due date.

Prompt Payment

The practice of paying invoices on time, which can help build good relationships with suppliers and might qualify the payer for discounts.