Which of the following is a flow in the circular flow model?
A) the flow of profit and the flow of revenue
B) the flow of income earned by firms and the flow of expenditures earned by households
C) the flow of revenue received by firms and the flow of payments to resource owners
D) the flow of goods and services from households to firms
C
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A firm's economic profits are given by
a. total revenue minus total accounting cost. b. the owner's opportunity cost. c. total revenue minus total economic cost. d. total revenue minus the cost of capital.
Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?
a. The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. b. The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. c. Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient. d. There will be no shortages under the first-come first-serve basis of allocation. e. A random process of allocation is fair in the sense that everyone gains and there are no losers.
In sequential games, the player who moves first:
A. has a first-mover advantage only when he or she is able to make a credible threat or promise to choose a dominated strategy. B. always has a first-mover advantage. C. has a first-mover advantage only when the second mover fails to choose the dominant strategy. D. sometimes has an advantage and sometimes has a disadvantage.
Suppose that Figure 10.4 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, a representative firm's profit would be:
A. $1,250. B. $450. C. $250. D. There is not sufficient information.