Question

Question 19 (1 point)

Which of the following statements is true in the simple circular flow model?

a	Income flows into the households as a result of their supply of resources to firms.
b	Since there is no saving in this simple model, households use all their income for spending in goods and services supplied by firms.
c	When firms sell their goods, the money they receive is called revenue, which is used to pay for the resources firms hire.
d	All of the above.
e	Only a) and b)

Question 20 (1 point)

Which of the following statements is true?

a	Alternate goods are those that are produced in the same plant for about the same cost.
b	The expectation that the price of a good will fall significantly in the near future increases today’s supply of the good.
c	Equilibrium is the state of rest of the market.
d	All of the above.
e	Only a) and b)

Question 21 (1 point)

Which of the following statements is true?

a	A good example of a price ceiling is rent control.
b	A price floor is a government-imposed maximum price in a market.
c	Price floors are set on goods whose producers need some special support (such as farmers, who face a lot of price volatility); the current equilibrium price is “so low” that many producers may go bankrupt.
d	All of the above.
e	Only a) and c)

Answer 1

19. d. All of the above
(All the statements are true because households supply resources to firms for which they receive income which they spend on goods and services.)

20. d. All of the above
(Alternate goods are goods produced in same plant. If future price is expected to decrease, today's supply will increase. And, equilibrium is state of balance or rest.)

21. e Only a) and c)
(Rent control is price ceiling, and price floor is minimum price set by the government.)