01/31/14 Circular Flow

• Circular Model- Represents flow of money, goods, and services.
• Factor Market- Factors of production are bought and sold. (Resources)
• Product Market- Market where goods and services are bought and sold. (Goods)
• Economic Actors
• Firm- Business or organization that produces goods and services for sale.
• Household- Person or a group of people that share an income.
• Factor Market- Resources
• Product Market- Goods
• In factor markets, firms purchase factors of production.
• In product markets when goods and services that firms produced are purchased by the households.