The Circular-Flow Diagram

question 85

Multiple Choice

The circular-flow diagram

• A)is an economic model.
• B)incorporates two types of decision makers: households and firms.
• C)represents the flows of inputs,outputs,and dollars.
• D)All of the above are correct.

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Definitions:

Factory Overhead Costs

Costs incurred from running a manufacturing plant that cannot be directly associated with any particular product, such as utilities, depreciation, and maintenance expenses.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a significant portion of the production cost.

Period Costs

Costs that are expensed in the period in which they are incurred, rather than being capitalized or included in the cost of goods sold, such as selling, general, and administrative expenses.

Direct Materials

Raw materials that can be directly associated with the production of goods, clearly identifiable and allocable to specific products or jobs.