In a Simple Circular-Flow Diagram, Firms Own the Factors of Production

question 178

True/False

In a simple circular-flow diagram, firms own the factors of production and use them to produce goods and services.

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Definitions:

For The Month

A phrase typically used to specify financial or operational activities or measurements within a specific month.

Variable Costing

An accounting method that only includes variable costs (costs that change with production levels) in the cost of goods sold and calculates fixed costs as period costs.

Net Operating Income

The total revenue from a business's operations minus its operating expenses, excluding taxes and interest.

Operating Loss

A situation where a company's operating expenses exceed its gross profits, indicating a negative profitability from business operations.