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Only 3 Entities in Economy Free Market System
Factor/Resource Market Demand Supply Gov’t Spending Resources Income Cost $ Resources Resources Government 4 factors of production: Land Labor Capital Entrepreneur Businesses supply in product market & demand in resource market. Individuals demand in the product market & supply in the resource market. Businesses Individual Gov’t Spending Goods & services Goods & services Purchased Goods & services sold Spending Revenue (Not Profit) Demand Supply Product Market
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Only 3 Entities in Economy Free Market System
Factor/Resource Market Demand Supply Gov’t Spending Income Cost $ Resources Resources Resources Tax $ Tax $ Transfer payment Subsidies G & S G & S 4 factors of production: Land Labor Capital Entrepreneur Businesses supply in product market & demand in resource market. Individuals demand in the product market & supply in the resource market. Government demands in the product & resource markets and supplies public goods. Transfer payment: money paid to individuals by the government through social programs Businesses Government Individual Goods & services Purchased Goods & services sold Goods & services Gov’t Spending Revenue (Not Profit) Spending Demand Supply Product Market
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The Circular Flow Model
Factor/Resource Market Demand Supply Income Cost $ Resources Resources Gov’t Spending Resources Tax $ Tax $ Transfer payment Subsidies G & S G & S 4 factors of production: Land Labor Capital Entrepreneur Businesses supply in product market & demand in resource market. Individuals demand in the product market & supply in the resource market. Government demands in the product & resource markets and supplies public goods. Transfer payment: money paid to individuals by the government through social programs Goods & services sold Gov’t Spending Goods & services Purchased Goods & services Revenue (Not Profit) Spending Demand Supply Product Market
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The Circular Flow Model
Unit 5 Unit 1 Factor/Resource Market Supply Demand Income Cost $ Resources Resources Gov’t Spending Resources Tax $ Tax $ Transfer payment Subsidies Unit 3&4 Unit 6 G & S G & S 4 factors of production: Land Labor Capital Entrepreneur Businesses supply in product market & demand in resource market. Individuals demand in the product market & supply in the resource market. Government demands in the product & resource markets and supplies public goods. Transfer payment: money paid to individuals by the government through social programs Goods & services sold Gov’t Spending Goods & services Purchased Goods & services Revenue (Not Profit) Spending Demand Supply Product Market Unit 2
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