In the Circular Flow Diagram, the Different Payments Made by Firms

question 16

Multiple Choice

In the circular flow diagram, the different payments made by firms to households include

• A) wages and profits.
• B) interest and taxes.
• C) transfer payments and dividends.
• D) taxes and transfer payments.

---

Definitions:

Demand Independence

The condition where the demand for one product does not directly affect the demand for another, allowing for independent forecasting.

Postponement

A supply chain strategy that delays the final assembly or customization of a product until the latest possible time to reduce inventory costs and increase flexibility.

Product Variety

The range of different products or variations of a product that a company offers to its customers to meet diverse preferences and needs.

Overstocking

Keeping more items in inventory than is necessary, which can lead to increased holding costs and potential waste.