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 amount left over after a company has paid all its expenses, including wages, rent, and materials. They are not a resource necessary for production, as production can occur without necessarily making a profit. Additionally, profits are not excluded from the circular flow diagram; they are included in the income earned by businesses, but not necessarily represented in every version of the diagram. Finally, while some profits may be paid out as dividends, this is not the only portion that is included in the circular flow diagram.

Which of the Following Statements Is TRUE About Profits