McConnell_Brue_Chapter02

To households chapter 2 chapter 2 35 35 slide 36 the

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Unformatted text preview: rning Objective 2-5) The lower half of the circular flow model illustrates the product markets. This market process is facilitated when households bring the money they earn from selling their resources and select from among the many different products available from businesses. The lower half of the circular flow completes the process. Although the circular flow illustration is overly simplified, it does represent a significant dimension of reality in market systems. The Product Market The Product Market The lower half of the The lower half of the circular flow model depicts circular flow model depicts the product market. the product market. Products are provided to Products are provided to the market when businesses the market when businesses convert the resources they convert the resources they purchased into goods and purchased into goods and services, and the households services, and the households bring the money they were bring the money they were paid for their resources to paid for their resources to purchase them. purchase them. Chapter 2 Chapter 2 Secondarily, by viewing this illustration we can easily identify the interdependent relationship existing between businesses, households, and the two major markets. We will be expanding our view of the circular flow model in the future, but for now you have a good grasp of not only what a market system looks like, but also how it functions efficiently. 36 36 15...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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