Use the following diagram to answer the next question.
In the diagram, solid arrows reflect real flows and broken arrows are monetary flows. Flow (7) might represent
A. wage payments to public school teachers.
B. subsidies to corporations to stimulate exports.
C. a transfer payment to disabled persons.
D. the U.S. Bureau of Engraving and Printing's expenditures for paper.
Answer: D
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Perfectly competitive industries are characterized by a homogeneous product.
Answer the following statement true (T) or false (F)
What role does money play in the circular flow model?
A furniture maker used to buy its wood, but has now bought the lumber company. How does this impact GDP?
A) It reduces it. B) It does not change. C) It increases it. D) We cannot tell.
To maximize cartel profit, the members must allocate output so that the marginal cost for the final unit produced by each firm is
a. identical b. unequal c. negative d. equal to the firm's average total cost e. maximized