In the Circular Flow Model, Firms Sell the Services of Factors

question 97

True/False

In the circular flow model, firms sell the services of factors of production to households.

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Definitions:

Piece Rate Systems

Compensation methods where employees are paid a fixed sum for each unit of production completed.

Base Pay

The initial rate of compensation that an employee receives in exchange for services. It excludes extra lump sum compensation or increases in the rate of pay for overtime or premium pay.

Merit Pay

Compensation increase awarded based on individual performance evaluation.

Individual Performance

The measure of the efficiency and effectiveness of an employee's work activities and outputs.