In the Circular-Flow Diagram

question 192

Multiple Choice

In the circular-flow diagram,

• A)firms are buyers in the markets for goods and services.
• B)households are sellers in the markets for the factors of production.
• C)firms are sellers in the markets for factors of production and in the markets for goods and services.
• D)dollars that are spent on goods and services flow directly from firms to households.

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Definitions:

Salvage Value

Salvage value refers to the expected value an asset will have when it's no longer useful, essentially its end-of-life resale value.

Internal Rate Of Return

The discount rate at which the net present value of an investment's cash flows equals zero, used in capital budgeting to estimate the profitability of potential investments.

Operating Costs

Expenses associated with the day-to-day operations of a business, excluding costs directly related to production, such as utilities, rent, and office supplies.

Profitability Index

A financial metric that measures the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.