1The circular flow model The following diagram presents a circular-flow model of a simple economy

1The 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. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when purchase in resource markets.

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