The Circular Flow Model of a Market Economy
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By this point in your course you may have learned the definition of a market: A place where buyers and sellers meet to engage in mutually beneficial exchanges. But what is a market economy? Two basic types of markets exist in any market economy: resource markets and product markets. The exchanges that take place in these markets benefit both the households and the firms that engage in exchanges. This lesson will introduce the circular flow of money, resources and goods and services in a market economy. We will examine how resources flow from households to firms, and goods and services from firms to households. We will also seek to explain why individuals are willing to engage in the exchanges that characterize the market system. http://www.econclassroom.com/?p=4397
Comments
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THank you, very helpful explanation
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I'm currently a freshman that's taking microeconomics in effort to becoming a business major. My question is, how are households providing wages and rent, when they're the ones paying it. Isn't the firms providing the wages and rent via income in exchange for the labor provided by households? Sorry Still trying to understand all of this thoroughly.
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dis be okay
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THIS HELPED ME SO MUCH THANK YOU!!!
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Definition of a market can be expanded to include that it is a process by which prices are established - not just a place.
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Towards the the end the flows (clockwise and anti-clockwise are mixed up).
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Entrepreneurship (that earn profit) should also be regarded as a vital resource (factor of production) in the process. Without entrepreneurship nothing will happen.
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Enjoyed the video! Hope it helps destroy that catch-phrase "trickle-down economics."
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So what are the inflow and outflow of firms
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So money CAN buy happiness
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9:21 Money is flowing clockwise.
Goods & Services Counterclockwise -
Thankyou so much!! makes so much sense to me!
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Thank you
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Helped so much
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THANK YOU SO MUCH FOR SAVING ME
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thank you..
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niiiiiice
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Great lesson, have a essay due next month and didn't understand what a market economy should look like. 'hooray, I get it'
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I liked your video. Till the end. I don't think i happiness equates consumption. I believe that through savings a person can seek to maximize his monetary as a end of itself. The goal being a rise in social status or a preparation for children etc.
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Jason.. From the bottom of my heart, thank you!!! With watery eyes
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