26 January 2016 (Unit 2)

• Circular Flow- It represents a transaction in a company.

• There are 2 markets
• Product Market- This is the place where goods and services are produced by businesses and they are bought by households.
• Factor/ Resource Market- This is the place where households sell resources and businesses buy resources.

• Firms- an organization that produces goods and sales

• Households- Person or group of people that share their income
• Sells factors of production to businesses
• EX: Waking up to school you are using factors of productions

• Firms rent or purchases land, which will be found in factor market

• Business demand resources from other businesses is also the factor market