In the Simple Circular-Flow Diagram

question 184

Multiple Choice

In the simple circular-flow diagram,

• A)households own the factors of production.
• B)households buy all the goods and services that firms produce.
• C)land,labor,and capital flow from households to firms.
• D)All of the above are correct.

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Definitions:

Firm Increases Price

A strategic decision by a company to raise the selling prices of its products or services, possibly due to increased costs or in response to high demand.

Rational

Referring to thinking or decision-making that is based on logic or reason rather than emotions.

Optimizing

The process of making something as effective, functional, or profitable as possible.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.