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Circular Flow Matrix
8
Costs
Factors of reproduction
Money income (wages, rents, interest, profits)
Revenue
Goods and services
Labor, land, capital, entrepreneurial ability
Goods and services
Consumption expenditures
Product Market
The product market is when goods and services are bought and sold. Households are the consumers and firms are the producers.
Macy's, Walmart, and Apple are all examples of a product market.
Businesses
A company that produces goods and services in effort to make a profit is a business. They hire and use factors of production. Firms produce goods and services which are supplied by households.
Adidas and Popeye's are examples of businesses.
Businesses
Resource Market
In the resource market, the four factors of production are bought and sold. Entrepreneurs hire labor for wages and salaries, get land in return for rent, and borrow money.
Land, labor, capital, and entrepreneurship are the 4 factors of production.
Households
A house and it's occupants considered as a unit that purchase goods and services fro businesses with the money gained from wages.
Mom, dad, son, daughter, and guardian are examples of occupants that would apply.
Government
The government gives goods and services to businesses and households while businesses and households give the government taxes. The product market gives goods and services to the government while the government gives expenditures to the resource and produce market.