Which one of the following is an example of the circular flow of GDP and shows the interdependence of households and firms?
a. Households demand their resources from the firms in the resource market and, in turn, supply in the product market the goods and services produced by firms
b. The firms go to the resource market to supply resources that households demand and, inin turn, provide households with the goods and services produced for the product market.
c. Households supply resources to firms in the resource market and, in turn, demand in the product market the goods and services produced by the firms.
d. The firms in the resource market pay to households in the form of wages, interest, rent, and profit—for resources demanded.
e. The circuit is completed when the payments flow from households, through the product market, and to the firms for the goods and services they demand.
C
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Joe's Pizza Shop only makes pizza. If each pizza requires five people, each of whom specializes in one task, this method of production is an example of
A) economies of scope. B) team production. C) economies of monitoring. D) economies of coordination.
If a firm is operating at an output level where losses are minimized, the firm
A) has no incentive to stay in the industry. B) is better off exiting the industry. C) is maximizing profits. D) will shut down.