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Circular Flow Graph

Image result for circular flow diagram economics
The big picture demonstrates the flow of economy as a whole.
Household-person or a group of people that share an income.

Firms-organization that produces goods and services for sale

Factor (Resource) Market-the market in which the factors of production (land, labor, capital, and entrepreneurship) are bought by firms and sold by households.
Ex: if you go somewhere you expect to get paid. Giving your time and service.

Product Market-market where goods and services are bought and sold.

Factor payments:
1) land- rent
2) labor- wages
3) capital- interest
4) entrepreneurship- profits
Student buying a hamburger is product market for buying goods
Business paying rent is factor payment so ot is a factor market.
Firm selling t shirts is a product market

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