To Hire an Input, a Business Owner Must Pay a Price

question 40

Multiple Choice

To hire an input, a business owner must pay a price that

• A) covers the transportation cost of the input owner.
• B) reflects the business owner's lowest-cost alternative activity.
• C) matches the best opportunity cost of the input owner.
• D) gives the input owner enough money to buy the assets of the business.
• E) reflects the business owner's best alternative activity.

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Definitions:

Circular-Flow Diagram

A visualization of the economy that shows how dollars flow through markets among households and firms, highlighting the interactions between product and resource markets.

Factor Market

A factor market is the marketplace where productive resources like labor, capital, and natural resources are bought and sold.

Product Market

A marketplace where finished goods and services are bought and sold.

Product Market

The marketplace in which final goods or services are offered for purchase by consumers, businesses, and the public sector.