Which of the Following Statements About a Simple Circular Flow

question 183

Multiple Choice

Which of the following statements about a simple circular flow model is false?

• A) Producers are buyers in the factor market and sellers in the product market.
• B) Households are neither buyers nor sellers in the input market.
• C) Producers are buyers in the factor market.
• D) Households are sellers in the product market.

Understand the concepts of human and physical capital and their implications for income generation.

Evaluate the role of uncertainty and risk in investment decisions and their impact on economic profit.

Recognize the importance of the present value concept in investment decision-making.

Acknowledge the importance of non-monetary considerations in human capital investment decisions.

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Definitions:

Technological Change

The process of innovation and the introduction of new technologies or methods in production, leading to increased productivity.

Ownership Of Scarce Inputs

The possession and control over resources that are limited in nature and necessary for production.

Network Externalities

The effect that one user of a good or service has on the value of that product to other people, where the value increases as the number of users rises.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.