Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
can you help me answer questions from the image attached please
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, firms earn revenue when
purchase
in product markets.
Suppose Maria earns $800 per week working as work as a flight attendant for Flyaway Airlines. She uses $10 to buy a box of aspirin at Pillmart
Pharmacy. Pillmart Pharmacy pays Kevin $450 per week to work the cash register. Kevin uses $300 to purchase air travel to Hawaii from Flyaway
Airlines.
Identify whether each of the following events in this scenario occurs in the factor market or the product market.
Event
Factor Market
Product Market
Maria earns $800 per week working for Flyaway Airlines.
Kevin earns $450 per week working for Pillmart Pharmacy.
Maria spends $10 to buy a box of aspirin.
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
аpply.
O The $300 Kevin spends to purchase air travel to Hawaii from Flyaway Airlines
O The $450 per week Kevin earns working for Pillmart Pharmacy
O Maria's labor
O The aspirin Maria receives
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