Unit 2: Circular Flow



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 Household: a person or a group of people who share an income.
  • sell resources
  • buy products
Firm: an organization that produces goods and services for sale.
  • they buy resources and sell products
Factor (Resource) Market: the market in which the factors of production are bought by firms and sold by households.
  • firms buy, households sell
Product Market: where goods and services are bought and sold.
  • firms sell, households buy
Factor Payments
  • Land - Rents
  • Labor - Wages
  • Capital - Interests
  • Entrepreneurship - Profits





Comments

  1. UnknownMarch 1, 2018 at 7:25 PM

    The government sector Is both a consumer and producer. The government consumes goods and services such as education, health, and defense. The government buys productive resources from households and firms. The government sector raises money through income tax, profits from firms and certain types of consumption expenditure. So in your chart I was wondering where the government would fall? I see how the households receive goods and services and then firms get factors of production, and I was able to prepare myself for the quiz know having this knowledge.

    ReplyDelete

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