In the Simple Circular-Flow Diagram,households

question 252

Multiple Choice

In the simple circular-flow diagram,households

• A)are represented, but firms are not represented.
• B)own the factors of production.
• C)are buyers of inputs.
• D)directly receive revenue from the sale of goods and services.

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Definitions:

Average Product

The output per unit of input, typically calculated by dividing total product by the quantity of input used in its production.

Marginal Product

The additional output gained by employing one more unit of input, such as labor or capital.

Marginal Product

The extra output that is produced by using one more unit of a factor, such as labor or capital, while keeping other factors constant.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable.