Circular Flow

Unit 2: Circular Flow

Household

• a person or group of people who share an income

Firms

• an organization that produces goods & services for sale

Factor (Resource Market)

• the market in which factors of production are bought by firms & sold by households

Product Market

• where goods & services are bought & sold

Factor Payments

1. land - rents
2. labor - wages
3. capital - interests
4. entrepreneurship - profits