Which of the Following Transactions Does Not Take Place in the Markets

question 335

Multiple Choice

Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

• A) Jason provides plumbing services for a plumbing company and receives an hourly wage from the company for his services.
• B) Jennifer works as a marriage counselor and her clients pay her on a per-hour basis for her services.
• C) Brody owns several shopping malls and receives rent payments from the companies that operate those malls.
• D) Bree sells advertising for a newspaper and receives a commission from the newspaper company for each advertisement that she sells.

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Definitions:

Long-Lived Assets

Assets that are expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and land.

After-Tax Cost

The actual cost of an expense or investment after accounting for the effects of taxes.

Pretax Cost

The expense or cost incurred by a business before the deduction of taxes.

Debt

Money owed by one party to another, under conditions of repayment often including interest.