Which of the following statements is true about profits?
A) Profits are excluded from the circular flow of the income diagram.
B) The only portion of profits that are included in the circular flow diagram are the portion paid out in the form of dividends.
C) Profits are considered one of the resources necessary for production.
D) Profits are considered a cost of doing business.

Question

Quizplus · Accepted Answer

Profits are considered a cost of doing business as they are the reward for taking risks and investing resources in a production process. They represent the difference between the revenue generated from sales and the total costs incurred in production. Therefore, profits are considered a necessary aspect of doing business, but they are not included in the circular flow of the income diagram, which only focuses on the flows of goods, services, and factors of production.

Which of the Following Statements Is True About Profits