Households derive income out of markets for factors and productions

Households derive income out of markets for factors and productions

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Households derive income out of markets for factors and productions Households spend income (GDP) in the market for goods and services (buy goods and services) Houses exports labor, land and capital to the market for factors of production Firms derive revenue out of markets for goods and services (sell goods and services) Firms sell goods and services to the markets for goods and services Firms export wages, rent and profits (to the markets for factors and productions) otice that goods & services and resources flow around the economy in one direction, while money flows around the economy in the opposite direction. This is because money is normally exchanged for goods & services, or for resources. Recall that factors of production in the economy are generally lumped into three broad categories: labor, land, and capital. The respective names for the prices of labor, land, and capital are wages, rent and profit. Households (people), in the circular flow,
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This note was uploaded on 04/24/2008 for the course ECON Intro-micr taught by Professor Alexander during the Spring '08 term at University of Houston.

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Households derive income out of markets for factors and productions

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