Explain the concept of the circular flow
What will be an ideal response?
The circular flow refers to the interrelationships between income and output. In every exchange the seller receives exactly what the buyer pays. This also means that someone's receipt is someone else's payment. Goods and services flow in one direction and money payments in the other. The total income received by people must equal the total spending of people. Businesses provide goods and services and sell them to households, and households provide the resources used by firms in exchange for income.
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An upward-sloping supply curve shows that
A. buyers are willing to pay more for a scarce product. B. suppliers are willing to increase production of their goods if they can receive higher prices for them. C. buyers are unaffected by sellers’ costs of production. D. the price of a product is not influenced by the price buyers are willing to pay. E. at higher prices, an envy effect begins to affect the demand curve.
When total revenue minus total economic cost is greater than zero, the firm is
a. earning higher than normal profits. b. earning the normal profit rate. c. making economic losses. d. earning economic profit but accounting losses.
Producer Surplus
What will be an ideal response?
Refer to the information provided in Figure 7.3 below to answer the question(s) that follow. 
Figure 7.3Refer to Figure 7.3. The average product with two workers is ________ yards raked.
A. 4 B. 13.5 C. 14 D. 27