Which of the following is an examples of spending on factors of production in the circular flow model?
A)Tuan purchases a cappuccino at the student union.
B)Laurence rents a car to drive to a wedding in San Diego.
C)Yvette pays $50 to join a softball league.
D)The "Lucky Ducky" casino buys a new craps table for the casino floor.

Question

Quizplus · Accepted Answer

The purchase of a new craps table by the "Lucky Ducky" casino is an example of spending on factors of production since it is an investment in a physical capital asset that will be used to produce goods and services (in this case, the service of gambling). Options A, B, and C all involve spending by individuals on final goods and services for personal consumption or leisure, which are not considered factors of production in the circular flow model.

Which of the Following Is an Examples of Spending on Factors