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:

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred to convert raw materials into finished goods.

Raw And In Process

Materials that are either in their natural state and used in the manufacturing of products or materials that are partially processed but not yet completed.

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

External Failure Costs

Costs associated with defects that are found after the product reaches the customer, including returns, repairs, and lost sales.