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 v purchase goods and services v in factor markets. firms Suppose Simone earns $600 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Rajiv $425 per week to work the cash register. Rajiv uses $400 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Simone earns $600 per week working for PC Pros. Rajiv earns $425 per week working for Pillmart Pharmacy. Rajiv spends $400 to purchase software from PC Pros. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. O The $400 Rajiv spends to purchase software from PC Pros O The aspirin Simone receives O Simone's labor O The $425 per week Rajiv earns working for Pillmart Pharmacy
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 v purchase goods and services v in factor markets. firms Suppose Simone earns $600 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Rajiv $425 per week to work the cash register. Rajiv uses $400 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Simone earns $600 per week working for PC Pros. Rajiv earns $425 per week working for Pillmart Pharmacy. Rajiv spends $400 to purchase software from PC Pros. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. O The $400 Rajiv spends to purchase software from PC Pros O The aspirin Simone receives O Simone's labor O The $425 per week Rajiv earns working for Pillmart Pharmacy
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The first fill in the blank option is (firms or households) the second one is ( goods and services or factors)
Transcribed Image Text: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
v purchase goods and services v in factor markets.
firms
Suppose Simone earns $600 per week working as a programmer for PC Pros. She uses $9 to buy a box of aspirin at Pillmart Pharmacy. Pillmart
Pharmacy pays Rajiv $425 per week to work the cash register. Rajiv uses $400 to purchase software from PC Pros.
Identify whether each of the following events in this scenario occurs in the factor market or the product market.
Event
Factor Market
Product Market
Simone earns $600 per week working for PC Pros.
Rajiv earns $425 per week working for Pillmart Pharmacy.
Rajiv spends $400 to purchase software from PC Pros.
Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that
apply.
O The $400 Rajiv spends to purchase software from PC pPros
O The aspirin Simone receives
O Simone's labor
O The $425 per week Rajiv earns working for Pillmart Pharmacy
Expert Solution
Step 1
Circular flow shows how goods and services are sold to households and how labor and capital are bought by firms in exchange of wages. Wages are then used to buy goods from firms.
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