Tuesday, February 9, 2016

Unit 2 - Circular Flow (1-25-16 to 1-27-16)

Circular Flow

There are 2 markets, the Factor and Product market.

In the Factor market:
  • Firms buy
  • Households sell
In the Product market: 
  • Firms sell
  • Households buy
Firms:
  • buy resources
  • sell products
Households:
  • sell resources
  • buy products

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2 comments:

  1. Luis GFebruary 10, 2016 at 5:46 AM

    Indeed the Circular Flow Diagram has the Product and Factor Market, but remember that its key function is to represent all transactions in an economy.

    ReplyDelete
  2. UnknownFebruary 10, 2016 at 6:10 AM

    The diagram is very helpful and shows a clear description of the flow!!!

    ReplyDelete

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