What is a circular flow diagram?
What will be an ideal response?
Economists have designed a system of national accounts that measures GDP in four equivalent ways - production, expenditure, income, and factors. The circular flow diagram provides a simple visual way of remembering the relationships among these four equivalent systems. Firms on the left produce goods and services (production). Households on the right pay to buy those goods and services (expenditure). Firms pay households to use households' capital and labor (income). Capital and labor are put to use by firms (factors of production). The accounting system is set up so that all four sets of flows are equal in value.
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Miniville is an isolated town located on the southern shore of Lake Condescending, a very large lake. The western edge of Miniville is adjacent to impassable mountains and there are no towns or businesses for many miles to the east. The 300 residents of Miniville are evenly distributed along 3 miles of shoreline on the lake, east of the mountains. Lake Shore Drive, the only street in town, provides access to Miniville's homes and businesses. All residents live between the lake and the street; businesses locate on the other side of the street. Lake Shore Drive is 3 miles long, and the points labeled A, B, and C are 1, 2, and 3 miles from the western end of Lake Shore Drive, respectively. All residents of Miniville shop at the store located closest to their homes. src="https://sciemce.com/media/4/ppg__rrr0818190951__f1q219g1.jpg" alt="" style="vertical-align: 0.0px;" height="117" width="538" />If the first store to open in Miniville is located at A, to maximize the number of customers it attracts, the next store to open should locate:
A. at C.
B. just west of A.
C. at B.
D. just east of A.
In the figure above, the marginal rate of substitution (MRS) at point A is equal to ________ pounds of pickles per pound of olives
A) 8 B) 6 C) 1 1/3 D) 2
When the supply of land is upward sloping,
a. all land owners earn land rents b. the demand for land must intersect it c. all land owners have the same supply price d. different supply prices are generated for different lands e. a rightward shift in demand causes land rents to fall
Control of a scarce resource or input can serve as an entry barrier
a. True b. False Indicate whether the statement is true or false