ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A simplified representation of a real situation that is used to better understand real-life situations.
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Illustrates trade-offs facing an economy that produces 2 goods. Shows max quantity of 1 good that can be produced for any given quantity produced of the other.
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Represents transactions in an economy by 2 kinds of flows around a circle:flows of physical things (goods or labor) in one direction and flows of money to pay for these physical things in the opposite direction.
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None of the above
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Detailed explanation-1: -What is the circular flow diagram? The circular flow diagram is one of the basic concepts of economics. This diagram explains the general movement of money on a day-to-day basis through the relationship that exists between the main economic agents, such as companies, families and the public sector.
Detailed explanation-2: -The circular flow diagram illustrates the equivalence of the income approach and expenditures approach to calculating national income. In this diagram, goods, services, and resources move clockwise, and money (income from the sale of the goods, services, and resources) moves counterclockwise.
Detailed explanation-3: -The circular flow model is an economic model that shows the flow of money through the economy. The most common form of this model shows the circular flow of income between the household sector and the business sector. Between the two are the product market and the resource market.
Detailed explanation-4: -Money flow and real flow are the two main aspects of the circular flow of income economic model.