What is a circular flow diagram and what does it demonstrate?
What will be an ideal response?
A circular flow diagram is a model that illustrates how participants in markets are linked. It shows who supplies and purchases factors of production and who supplies and purchases goods and services.
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An effluent fee is a
A) subsidy given to the producer of a positive externality. B) charge to a polluter that gives the right to discharge pollution into the air. C) fine imposed on a polluter for dumping illegal pollution. D) charge for a public good.
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. Which of the following is true? a. Mutually beneficial trade between Karl and Adam could take place at an exchange rate of 1 ton of apples to 1 1/2 ton of oranges. b. Mutually beneficial trade between Karl and Adam could take place at an exchange rate
of 1 ton of oranges to 1 1/2 ton of apples. c. both a. and b. are true. d. neither a. nor b. are true.