Question

According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms that employ their resources must be falling.
(A) True
(B) False

Answer 1

Answer:

(B) False

Explanation:

In the circular flow, the raw material that is basic resource provider gets to increase his income which means that his profit margin is high thus sales value is high and therefore, the result will be higher cost for the producers using such resources.

Since the cost to producers is revenue to resource owner's, this means high revenue to owner's and high cost to producers.

Thus, above stated statement is

(B) False