Bell Work Which of the following is a strength of a market economy? Guaranteed equity Guaranteed employment Opportunity for profit Lots of govt. regulation to ensure that no one has too little or too much

Circular Flow Diagram

Market: allows buyers and sellers to exchange items Specialization: concentration of the productive efforts of individuals and firms on a limited number of activities---leads to efficient use of resources Free Market Economy: based on voluntary exchanges---exchange money and products

The Circular Flow Diagram Inner ring: represent the flow of resources and products Outer ring: represents the flow of money

Household: Person or group of people living in the same residence: OWN the FOP and are CONSUMERS of goods and services Firms: Businesses or organizations that USES resources to produce a product, which it sells. Transforms the “INPUTS” of the FOP into “OUTPUT” products

Factor Market: Firms purchase or rent land, hire workers and pay them wages and borrow money Product Market: Household purchase products made by firms with the money that they received from firms

Draw the CFD 1. Draw and label the CFD with arrows and headings Label the CFD that corresponds with each transaction I purchase a coat from Walmart I work for Walmart I get paid for working at Walmart Footlockers provides shoes to customers

Your turn: List 6 transactions that would occur in the market and label them A through F Draw the Circular Flow Diagram and label it Put the 6 transactions onto the circular flow diagram