5 Questions
In a circular-flow diagram, what type of market do households participate in as buyers, and what type of market do firms participate in as sellers?
Households participate in the goods and services market as buyers, and firms participate in the goods and services market as sellers.
What is the role of households in the factor market, and what type of resources do they supply to firms?
Households supply labor and capital to firms in the factor market.
What is the primary function of firms in the circular-flow diagram, and how do they compensate households?
The primary function of firms is to produce goods and services, and they compensate households by paying wages and rents for the use of labor and capital.
How do households receive income in the circular-flow diagram, and what do they use this income for?
Households receive income in the form of wages and rents, and they use this income to purchase goods and services from firms.
What is the ultimate goal of households and firms in the circular-flow diagram, and how is it achieved?
The ultimate goal is to maximize utility and profit, respectively, and it is achieved through the exchange of goods and services, labor, and capital.
This quiz is about understanding the interactions between households and firms in a simple economy, represented by a circular flow diagram. It tests knowledge of the flow of goods, services, and money between these two sectors.
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