The Circular Flow of Economic Activity
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The circular flow diagram models the transactions between households and firms in an economy. Households receive income from supplying factors of production like labor to firms and use that income to purchase goods and services from firms. Firms take those income flows and use them to purchase inputs from households in factor markets to produce more goods and services. The circular flow diagram illustrates the interdependence between production, income, and consumption in an economy.
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The document describes the circular flow of economic activity between households and firms. It shows that households receive income from firms for supplying factors of production like labor, capital and land. Households then use this income to purchase goods and services from firms. Firms take these factor payments and use them to pay for costs like wages, rent, interest and profit. The cycle then repeats with firms producing goods that households demand. This circular flow involves the continuous movement of goods, services and money between households and firms.
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> Resources: DepEd SHS curriculum guide and Rex Book AE
> This helping material comes with a worksheet on a separate document. Message me for any questions. Hope this helps!
Applied Economics: Application of Demand and Supply (Chapter 2.1)
- The Market
- Demand
- The Law of Demand
- Non-Price Determinants of Demand
- Shifts of Demand Curve
- Supply
- The Law of Supply
- Non-Price Determinants of Supply
- Shits of Supply Curve
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Students should be able to:
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Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
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But it does not tell us the rate at which demand changes to change in price.
The concept of elasticity of demand was introduced by Marshall.
This concept explains the relationship between a change in price and the consequent change in quantity demanded.
Nutshell, it shows the rate at which changes in demand take place.
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Dmydocspatricelourdescollegepowerpointsecon1thecircularflowofeconomicactivity...
The document summarizes the circular flow of economic activity between households and firms. It describes how goods, services, and money flow between the two sectors as households consume goods and services and firms produce goods and services. It also explains how the government and foreign sectors interact with households and firms through taxes, transfer payments, imports, and exports. The circular flow model illustrates that the economy functions as an interconnected system and that incomes received by one sector are spent on the goods and services of the other, keeping the flow of economic activity ongoing.
Circular flow
The circular flow diagram models economic transactions between households and firms. Households supply factors of production like labor to firms and receive income, while firms take that income to sell goods and services back to households. This continuous flow of payments between households and firms illustrates the interdependence of consumption and production in an economy.
Eco slideshare Chapter=Circular Flow of Income
The circular flow of income model represents the major exchanges in an economy as flows of money, goods, and services between households and firms. There are three phases: 1) generation, where firms produce goods using inputs from households, 2) distribution, where firms pay households for inputs in the form of factor income, and 3) disposition, where households spend their income on goods from firms. The flows move in opposite directions, with real resources and financial capital flowing one way and payments flowing the other, forming a closed circuit.
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A government imposed price control, like rent control, can result in shortages as seen in crowded grocery store lines during times of price controls in Europe. A price floor, like a minimum wage, sets a price above the equilibrium price and results in a surplus of the good. For example, a minimum wage leads to higher unemployment rates for younger, unskilled workers. A price ceiling sets a price below the equilibrium price and results in a shortage of the good, like limitations on concert ticket scalping creating a shortage. [/SUMMARY]
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Law of Supply and Demand
The document discusses supply and demand theory. It explains that supply and demand curves slope upward and downward respectively, showing that quantity supplied increases with price while quantity demanded decreases with price. A change in price results in movement along the existing curves, while other factors like income, tastes, technology, and costs can cause the curves to shift left or right. The interaction of supply and demand determines market equilibrium price and quantity.
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This chapter discusses factor markets and income distribution. It covers the determinants of demand for factors of production like labor, land, capital and entrepreneurship. It also discusses the supply of factors in the market and how their prices are determined by supply and demand. The chapter concludes by covering different theories of income distribution including the marginal productivity theory and discussing the various sources of income like wages, rent, interest and profits.
Circular flow of income or circular flow
The circular flow of income model describes the reciprocal flow of money between households and firms. Households supply factors of production like labor to firms and receive income, while firms supply goods and services to households in exchange. This forms a continuous loop referred to as the circular flow of income, with payments in each direction. The model can be expanded to include government and foreign trade. It helps explain macroeconomic concepts like GDP, equilibrium, and the effects of policies.
theory of production and cost
The document discusses key concepts related to production theory and cost analysis. It defines production as transforming inputs into outputs. Inputs can be fixed or variable, and production functions are classified as short-run or long-run depending on whether inputs are fixed or variable. The law of diminishing returns and returns to scale are explained. Cost concepts like total, average, fixed and variable costs are introduced. Break-even analysis is defined as a technique to understand the relationship between sales, costs and profits. Key assumptions and applications of break-even analysis are also outlined.
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1) This document discusses various concepts related to production analysis including factors of production, production functions, laws of variable proportions, isoquants, marginal rate of technical substitution, and returns to scale.
2) The factors of production are land, labor, capital, and entrepreneurship. Production functions include fixed proportion, variable proportion, linear homogeneous, Cobb-Douglas, and constant elasticity of substitution.
3) The law of variable proportions explains how output increases at different rates as one variable input is increased while others stay fixed. Returns to scale refers to how output changes as all inputs change proportionately.
Supply Demand and Equilibrium
Supply Demand and Equilibrium..
Market Exchange..
Law of Supply...
Law of Demand...
Laws of supply and demand versus the “theory of supply and demand”
Laws vs. Theory of Supply and Demand..
Different types of demand..
Market Supply ..
Demand Curve..
Supply Curve..
Market Equilibrium..
Elasticity..
Own price elasticity of demand..
Circular flow
The document describes the circular flow of income model and its evolution from a simple two-sector model to a more complex five-sector model. It explains the key components of each model - households and firms in the two-sector model and the additions of government and foreign sectors in later models. It also discusses the concept of equilibrium between total leakages (savings, taxes, imports) and injections (investment, government spending, exports) and how disequilibrium can cause economic expansion or contraction until equilibrium is regained.
Application of Demand and Supply
> Resources: DepEd SHS curriculum guide and Rex Book AE
> This helping material comes with a worksheet on a separate document. Message me for any questions. Hope this helps!
Applied Economics: Application of Demand and Supply (Chapter 2.1)
- The Market
- Demand
- The Law of Demand
- Non-Price Determinants of Demand
- Shifts of Demand Curve
- Supply
- The Law of Supply
- Non-Price Determinants of Supply
- Shits of Supply Curve
Basic Economic Problems
The document discusses the basic economic problem of scarcity and opportunity cost. It defines the key concepts of needs and wants, and explains that while needs are necessities, wants are pleasurable but not necessary goods. Resources used to produce goods and services are finite but human wants are unlimited, creating an economic problem. The concept of opportunity cost, which is the next best alternative forgone when making a choice due to scarce resources, is introduced and illustrated using a production possibilities frontier diagram showing the tradeoffs between producing two goods.
Law of.Supply
The document discusses the law of supply, which states that, all other things held constant, as the price of a good increases, the quantity supplied of that good also increases, and vice versa. It provides definitions and assumptions of the law, including that production costs, technology, climate, prices of substitutes, and natural resources remain unchanged. An example is given showing how the quantity supplied of wheat by a farmer increases from 5 to 60 bushels as the price per bushel rises from $1 to $5. The concepts of supply movements and shifts are explained, along with various determinants that can cause a supply shift, such as changes in input prices, technology, transportation, and policies.
Imperfect Competition
In a perfectly competitive market, firms are price-takers. It is largely regarded as an ideal situation and such a market situation is hard to find. In the real world, you are dealing with firms large enough to affect the market price. In many such markets there are handful of firms who dominate in one way or other. Such markets are market of imperfect competition.
Law of supply
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The document discusses demand functions and different types of demand. It defines individual and market demand functions. Individual demand function shows how demand for a commodity relates to its price, income of the consumer, tastes and other factors. Market demand function adds population size and income distribution as additional factors. The document also outlines seven types of demand: direct vs derived, domestic vs industrial, autonomous vs induced, perishable vs durable goods, new vs replacement, final vs intermediate, and individual vs market demands.
Consumer Behavior & Utility Maximization Micro Economics ECO101
This document discusses microeconomics and consumer behavior topics including utility maximization, demand, and consumer choice. It defines key concepts like total utility, marginal utility, and the law of diminishing marginal utility. It provides examples to illustrate these concepts and how consumers make choices to maximize their utility subject to budget constraints. Rational consumers will allocate their limited income between goods in a way that equalizes the marginal utility per dollar between each good. The document also discusses substitution and income effects that occur when prices change.
Perfect Competition
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Lec 15 Elasticity of Demand
Elasticity of Demand
Law of demand explains the directions of changes in demand. A fall in price leads to an increase in quantity demanded and vice versa.
But it does not tell us the rate at which demand changes to change in price.
The concept of elasticity of demand was introduced by Marshall.
This concept explains the relationship between a change in price and the consequent change in quantity demanded.
Nutshell, it shows the rate at which changes in demand take place.
Cost & Revenue
This document discusses the concepts of cost and revenue and how they relate to profit maximization for firms. It defines key cost concepts like fixed vs variable costs, historical vs replacement costs, and private vs social costs. Cost is determined by factors like plant size, output level, input prices, productivity, technology, and management efficiency. In the short run, total costs increase with output while average costs initially decrease and then increase due to limitations on varying fixed costs. Maximizing profit requires increasing revenue and decreasing costs.
Dmydocspatricelourdescollegepowerpointsecon1thecircularflowofeconomicactivity...
The document summarizes the circular flow of economic activity between households and firms. It describes how goods, services, and money flow between the two sectors as households consume goods and services and firms produce goods and services. It also explains how the government and foreign sectors interact with households and firms through taxes, transfer payments, imports, and exports. The circular flow model illustrates that the economy functions as an interconnected system and that incomes received by one sector are spent on the goods and services of the other, keeping the flow of economic activity ongoing.
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Circular flow
The circular flow diagram models economic transactions between households and firms. Households supply factors of production like labor to firms and receive income, while firms take that income to sell goods and services back to households. This continuous flow of payments between households and firms illustrates the interdependence of consumption and production in an economy.
Eco slideshare Chapter=Circular Flow of Income
The circular flow of income model represents the major exchanges in an economy as flows of money, goods, and services between households and firms. There are three phases: 1) generation, where firms produce goods using inputs from households, 2) distribution, where firms pay households for inputs in the form of factor income, and 3) disposition, where households spend their income on goods from firms. The flows move in opposite directions, with real resources and financial capital flowing one way and payments flowing the other, forming a closed circuit.
circular flow of an Economy
The circular flow of income refers to the continuous flow of payments between two main sectors - the household sector and the business sector. The household sector owns factors of production like labor, land, and capital and receives income by supplying these factors to businesses. Businesses take these factors to produce goods and services, which they sell to households. Households then use their income to purchase goods and services. This continuous flow creates a circular pattern between the two sectors, with money constantly moving from businesses to households and back again. The model can be expanded to three sectors with the addition of the government sector, which engages in taxation as a leakage from the circular flow and government purchases as an injection into it. Understanding the circular flow is important for
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Draw the components of the circular flow model (context below)
The Circular Flow Model 1. LO2.5 Describe the mechanics of the circular flow model. The dynamic
market economy creates continuous, repetitive flows of goods and services, resources, and
money. The circular flow diagram, shown in Figure 2.2 (Key Graph), illustrates those flows for a
simplified economy in which there is no government. The figure groups the economys decision
makers into businesses and households. Additionally, we divide this economys markets into the
resource market and the product market. Key Graph FIGURE 2.2 The circular flow diagram.
Resources flow from households to businesses through the resource market, and products flow
from businesses to households through the product market. Opposite these real flows are
monetary flows. Households receive income from businesses (their costs) through the resource
market, and businesses receive revenue from households (their expenditures) through the product
market.
Households
The blue rectangle on the right side of the circular flow diagram in Figure 2.2 represents
households, defined as one or more persons occupying a housing unit. There are currently about
119 million households in the U.S. economy. Households buy the goods and services that
businesses make available in the product market. Households obtain the income needed to buy
those products by selling resources in the resource market.
All the resources in our no-government economy are ultimately owned or provided by households.
For instance, the members of one household or another directly provide all of the labor and
entrepreneurial ability in the economy. Households also own all of the land and all of the capital in
the economy either directly, as personal property, or indirectly, as a consequence of owning all of
the businesses in the economy (and thereby controlling all of the land and capital owned by
businesses). Thus, all of the income in the economyall wages, rents, interest, and profitsflows to
households because they provide the economys labor, land, capital, and entrepreneurial ability.
Businesses
The blue rectangle on the left side of the circular flow diagram represents businesses, which are
commercial establishments that attempt to earn profits for their owners by offering goods and
services for sale. Businesses fall into three main categories.
A sole proprietorship is a business owned and managed by a single person. The proprietor (the
owner) may work alone or have employees. Examples include a woman who runs her own tree-
cutting business and an independent accountant who, with two assistants, helps his clients with
their taxes.
In a partnership, two or more individuals (the partners) agree to own and operate a business
together. They pool their financial resources and business skills to operate the business, and they
share any profits or losses that the business may generate. Many law firms and dental practices
are organized as partnerships.
A corpora.
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This document defines key concepts in economics. It begins by providing definitions of economics from various sources, focusing on the study of scarce resources and unlimited wants. It then outlines different economic systems like capitalism, communism, and socialism. It also discusses the four factors of production (land, labor, capital, entrepreneurship). The document explains concepts like microeconomics, macroeconomics, stocks and flows. It provides a detailed explanation of the circular flow model, showing the flows of goods, services and income between households and firms. It concludes by discussing savings, investment and how they relate to the circular flow model.
8business cycles-110505123053-phpapp01
This document discusses business cycles and theories of business cycles. It defines business cycles as alternating periods of economic prosperity and depression, characterized by fluctuations in production, prices, employment, and other economic indicators. Several theories of business cycles are presented, including monetary, psychological, overproduction, underconsumption, innovation, and accelerator theories. The multiplier-accelerator model is described as a way fluctuations can be generated through the interaction of investment, consumption, and aggregate demand. Methods to control business cycles discussed include monetary policy, fiscal policy, and automatic stabilizers.
The circular flow_of_economic_activity
The document describes a classroom activity to simulate the circular flow of economic activity. In the activity, half the class takes on the role of households who own resources that they sell to businesses, while the other half plays businesses who use the resources to produce products that are then sold back to households. The activity aims to demonstrate how resources and money circulate between producers and consumers in a market economy through production and exchange.
Circular flow of Income
The circular flow of income model describes the flow of money between producers and consumers. Producers (firms) pay households for resources and labor, then households use that income to buy goods and services from firms, completing the circular flow. The model can be expanded to include financial institutions, government, and foreign trade. Equilibrium occurs when total leakages (savings, taxes, imports) equal total injections (investment, government spending, exports).
RATIO ANALYSIS - UNIT-5.pptx
The document discusses various financial ratios used for analysis. It begins by defining ratio analysis and its importance. It then categorizes ratios into liquidity ratios, activity ratios, profitability ratios, and leverage ratios. Specific ratios discussed in detail include current ratio, quick ratio, inventory turnover ratio, debtors turnover ratio, gross profit ratio, net profit ratio, operating profit ratio, EPS, and debt-equity ratio. Formulas for calculating these ratios are provided. Examples are given to demonstrate calculating some of these ratios.
Basic Models SFLS
The document describes three basic models of the economy:
1) The circular flow model shows how households and firms interact in the goods/services and factor markets.
2) The business cycle model looks at how the economy fluctuates over time between periods of growth, peak, recession, and recovery.
3) The production possibilities curve illustrates the tradeoffs between producing different amounts of two goods given limited resources, with points on the curve being efficient and outside being impossible.
Business economics
This document provides an overview of key concepts in business economics. It discusses the circular flow diagram, which shows how dollars flow between households and firms through two markets: the market for goods and services, and the market for factors of production like labor, land, and capital. The circular flow diagram illustrates that households own factors of production and sell them to firms for income, then use that income to buy goods and services from firms. Firms take the factors of production from households to produce goods and services, then sell those goods and services to households. The document also mentions production possibility frontiers, supply and demand, and the differences between microeconomics and macroeconomics.
Circular flow
The circular flow of income model represents an economy through 5 interconnected sectors: households, businesses, finance, government, and overseas. It depicts the flows of money and resources as households supply resources to businesses in exchange for income, businesses produce goods and services, and money flows between the sectors through various economic transactions like savings, taxes, investment, imports and exports. For the economy to be in equilibrium, the total leakages leaving the system through savings, taxes, and imports must equal the total injections entering through investment, government spending, and exports.
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如果您处于以下几种情况：
◇在校期间，因各种原因未能顺利毕业……拿不到官方毕业证【q/微741003700】
◇面对父母的压力，希望尽快拿到；
◇不清楚认证流程以及材料该如何准备；
◇回国时间很长，忘记办理；
◇回国马上就要找工作，办给用人单位看；
◇企事业单位必须要求办理的
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留信网认证的作用:
1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
6:个人职称评审加20分
7:个人信誉贷款加10分
8:在国家人才网主办的国家网络招聘大会中纳入资料，供国家高端企业选择人才
Economic Risk Factor Update: June 2024 [SlideShare]
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The Circular Flow of Economic Activity
- 1. The Circular FlowThe Circular Flow Of EconomicOf Economic ActivityActivity Chapter 2
- 2. The Circular-Flow DiagramThe Circular-Flow Diagram The circular-flow diagram is a model that represents the transactions in an economy by flows around a circle.
- 3. Circular-Flow of EconomicCircular-Flow of Economic ActivitiesActivities A household is a person or a group of people that share their income. A firm is an organization that produces goods and services for sale. Firms sell goods and services that they produce to households in markets for goods and services. Firms buy the resources they need to produce— factors of production—in factor markets.
- 5. Basic Economic ActivitiesBasic Economic Activities Production Consumption Employment Income Generation
- 6. Stock And Flow VariablesStock And Flow Variables Flow – quantity measured over a particular period of time. Stock – quantity measured as of given point in time.
- 7. Economic Variables ofEconomic Variables of Wealth and IncomeWealth and Income Wealth – anything value owned. It may consist of money, jewerly, buildings, and other property. Income – It is a rate of which we earn money.
- 8. The Circular-Flow DiagramThe Circular-Flow Diagram