It shows the flow of goods, services and money in the two markets (input and output markets). The firm plays a role of a buyer by buying the factor inputs of the household in the input or resource market and at the same time as seller of goods in the output or goods market. On the other hand, the household plays a role of seller when it sells it land, labor and capital to the firm in the input market and at the same time, plays the role of buyer of goods sold by the firm in the output market.