1. The circular flow model The following diagram presents a circular-flow model
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Question
1. The circular flow model
The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.
Based on this model, firms earn revenue when purchase in product markets.
Suppose Eleanor earns $600 per week working as a programmer for PC Pros. She uses $10 to have breakfast at Dinah's Diner. Dinah's Diner pays Darnell $300 per week to work as a short-order cook. Darnell uses $250 to purchase software from PC Pros.
Identify whether each of the following events in this scenario occurs in the resource market or the product market.
Event
Resource Market
Product Market
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.
The $250 Darnell spends to purchase software from PC Pros
Eleanor's labor
The $300 per week Darnell earns working for Dinah's Diner
The breakfast Eleanor receives
Event
Resource Market
Product Market
Darnell spends $250 to purchase software from PC Pros. Eleanor spends $10 to have breakfast. Darnell earns $300 per week working for Dinah's Diner. Markets for Goods and Services Firms Households Markets for Factors of ProductionExplanation / Answer
Product market,
Product market
Resource market
Eleanor's labour, the 250 Danielle spends to purchase software from pc pros
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