Friday, February 16, 2018

Unit 2 - Circular Flow

Circular Flow


  • Government is both a producer and consumer in both markets
  • Household - a person or a group of people who share an income
  • Firm/Business - an organization that produces goods and services for sale
  • Factor (Resource) Market - the market in which factors of production are bought by firms and sold by households
  • Product Market - where goods and services are bought and sold

Factor Payments

  • [W]illy - wages (labor)
  • [R]est - rent (land)
  • [I]n - interests (capital)
  • [P]eace - profits (entrepreneurship)


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