Chapter 2, Problem 8P

To determine

A circular flow diagram showing education sector and determine impact on the circle if government subsidize 50% of tuition fee

Circular Flow Concept

Circular flow diagram in economics depicts that there is a flow of goods and services and money between two parts of the economy, namely households and producers. The producers use the market factors made available to them by the households in exchange of money. The goods and services produced by the producers by utilizing such factors, is then made available to the households in exchange of money.