Question

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. Markets for Goods and Services Firms Households Markets for Factors of Production purchase in Based on this model, households earn income when factor markets. Suppose Poornima earns $725 per week working as a programmer for PC Pros. She uses $10 to have breakfast at Dinah's Diner. Dinah's Diner pays Manuel $500 per week to work as a short-order cook. Manuel uses $300 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Poornima earns $725 per week working for PC Pros. Manuel spends $300 to purchase software from PC Pros. Poornima spends $10 to have breakfast. 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 outputs. Check all that apply. Poornima's labor The breakfast Poornima receives The $500 per week Manuel earns working for Dinah's Diner The $300 Manuel spends to purchase software from PC Pros Grade It Now Continue Continue without saving

how do I answer this I keep getting it wrong

Answer 1

a) As per the model household earns income when firms purchase labor/ factor of income in factor market.

b) What ever Poornima is earning will be part of the factor market because she owns a factor of production that is Labor. So, first option will be factor market.

c) Manuel spending to buy goods and Poornima spending will be part of the product market, so B and C will be product market.

d) B and C are the flow from the firm to household,