Judging from the circular flow diagram, what happens to dollars that households earn as wages?
a. They are given to other households in the form of tax distributions.
b. They are given to firms in exchange for capital and labor.
c. They are recycled back to firms when households buy products and services.
d. They are removed from the simple circular flow diagram, making the circle smaller.
c. They are recycled back to firms when households buy products and services.
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If the average income of the consumers of Good A increased from $400 to $440, and the quantity demanded of Good A increased from 1,200 units to 1,300 units, then the income elasticity of demand for Good A is equal to:
a. 1.65. b. 1.16. c. 0.35. d. 0.84.
People who create new economic enterprises are called:
A. engineers. B. entrepreneurs. C. owners of physical capital. D. technology experts.
The minimum efficient scale is:
A. the quantity after which it makes no sense for a firm to produce. B. the minimum quantity where a firm would be able to produce profitably. C. the output level beyond which the firm will not experience scale economies. D. the output level beyond which the firm will experience scale economies.
A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of
A) 0.7. B) 1. C) 1.5. D) 10.