Answered: RESOURCE MARKET • Households sell •…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Let’s put dollar amounts on the flows in the circular flow diagram of Figure
a. Suppose that businesses buy a total of $100 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $60 billion in wages, $10 billion in rent, and $20 billion in interest, how much are households paid for providing entrepreneurial ability?
b. If households spend $55 billion on goods and $45 billion on services, how much in revenues do businesses receive in the product market?

RESOURCE
MARKET
• Households sell
• Businesses buy
Costs
Jand, capital
eurial ability
Resources
BUSINESSES
HOUSEHOLDS
• buy resources
• sell products
• ell resources
• buy products
and services
PRODUCT
MARKET
Businesses sell
• Households buy
Goods and services
Revenue
Consumption
oney income (wages, rents,
interest,
entrepre-
expenditures
Goods

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