1. Unit 2: Microeconomics Supply and Demand

2. The Circular Flow Model
The Product Market-
The “place” where goods and services produced by businesses are sold to households.
The Resource (Factor) Market-
The “place” where resources (land, labor, capital, and ent.) are sold to businesses.

3. DEMAND SUPPLY Individuals Businesses SUPPLY DEMAND Resource Market
$$$ Costs $$$
$$$ Income $$$
Resources
Resources
(Factors of
Production)
Individuals
Businesses
Goods and
Services
Goods and
Services
$$$ Spending $$$
$$$ Revenue $$$
SUPPLY
DEMAND
Product Market 3

4. Create Your Own Circular Flow
You may choose a partner for this activity.
You will take a resource or good and demonstrate how it would move through the circular flow process.
Be sure to clearly identify each step and what is exchanged by each party throughout the circular flow.
Be creative, and be appropriate for school.