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, households earn income when (firms /households) purchase (resources/goods and services) in resource markets.
Suppose Becky earns $650 per week working as an analyst for A-plus Accountants. She uses $10 to order a mojito cocktail at Little Havana. Little Havana pays Alex $250 per week to wait tables. Alex uses $250 to purchase tax services from A-Plus Accountants.
Identify whether each of the following events in this scenario occurs in the resource market or the product market.
1.Alex earns $250 per week working for Little Havana. (Resource Market / Product Market)
2. Becky spends $10 to order a mojito cocktail. (Resource Market / Product Market)
3. Becky earns $650 per week working for A-Plus Accountants. (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 mojito Becky receives
( ) The $250 Alex spends to purchase tax services from A-Plus Accountants
( ) The $250 per week Alex earns working for Little Havana
( ) Becky's labor
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, households earn income when (firms /households) purchase (resources/goods and services) in resource markets.
Suppose Becky earns $650 per week working as an analyst for A-plus Accountants. She uses $10 to order a mojito cocktail at Little Havana. Little Havana pays Alex $250 per week to wait tables. Alex uses $250 to purchase tax services from A-Plus Accountants.
Identify whether each of the following events in this scenario occurs in the resource market or the product market.
1.Alex earns $250 per week working for Little Havana. (Resource Market / Product Market)
2. Becky spends $10 to order a mojito cocktail. (Resource Market / Product Market)
3. Becky earns $650 per week working for A-Plus Accountants. (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 mojito Becky receives
( ) The $250 Alex spends to purchase tax services from A-Plus Accountants
( ) The $250 per week Alex earns working for Little Havana
( ) Becky's labor
Related textbook solutions
Related questions
A. Based on the model, firms earn revenue when ______________(firms, households) purchase ___________(goods and services, labor and capital) in markets for goods and services.
B. Suppose Kate earns $800 per week working as a doctor for the Medical Clinic. She uses $9 to order a mojito cocktail at Little Havana. Little Havana pays Hubert $300 per week to wait tables. Hubert uses $175 to purchase medical services from the Medical Clinic.
a. Identify whether each of the following events in the scenario occurs in the market for factors of production or the market for goods and services.
| Event | The market for Factors of Production | The market for goods and services |
| Kate spends $9 to order a mojito cocktail. | ||
| Hubert spends $175 to purchase medical services for the Medical Clinic. | ||
| Hubert earns $300 per week working for Little Havana. |
b. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or output.
Kate's labor, The Mojito Kate receives, The $175Hubert's spend to purchase Medical services from the Medical Clinic.
c. The actual economy is more complicated than the one illustrated in the previous circular-flow diagram of a simple economy. True/False.
