In the circular flow model, households earn their incomes in the

At times risk averse people are willing to _____ to avoid risk.

Fill in the blank(s) with the appropriate word(s).

What criticism does the textbook level against the cost-plus-markup theory of price setting?

A) The theory does not agree with what businessmen say about price setting. B) The theory does not account for vastly different percentage markups on different products. C) The theory implies firms will sometimes want to set prices below average cost per unit. D) The theory ignores sunk costs. E) All of the above.