Question

2. 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. Goods and Services Firms Markets for Factors of Production Based on this model, households earn income when purchase ▼ in factor markets. Suppose Hilary earns $650 per week working as jewelry appraiser for Classy's Jewelry Store. She uses $8 to have breakfast at Dinah's Diner. Dinah's Diner pays Edison $225 per week to work as a short-order cook. Edison uses $275 to purchase necklace from Classy's Jewelry Store. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Product Market Edison earns $225 per week working for Dinah's Diner. Hilary spends $8 to have breakfast. Edison spends $27S to purchase necklace from Classy's Jewelry Store. 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 O The $275 Edison spends to purchase necklace from Classy's Jewelry Store O The breaikfast Hilary receives O Hlary's labor O The $225 per week Edison earns working for Dinah's Dine

Answer 1

The diagram presents a circular flow model of a simple economy The outer set of arrows shows the flow of dollors Based on this model, firm earn revenue when households purchase in product market Represent the table as follows: The scenarios that represent the flow a firm to be house hold as follows: Hilary labor the $ 275 Edison spends to purchase necklace from classy's Jewelry store