The following diagram presents a circular flow model of a simple economy. The outer (green) set of
arrows shows the flow of money, and the inner (red) set of arrows shows the corresponding flow of
inputs and outputs.
Based on this model, firms earn revenue when households purchase goods and services in product
markets.
Winona earns $900 per week working as a doctor for the Springfield Medical Clinic. She uses $8 to order
a mojito cocktail at Little Havana. Little Havanna pays Kevin $480 per week to wait tables. Kevin uses
$400 to purchase medical services from the Springfield Meidcal Clinic.
Which of the events in this scenario occur in resource markets?
Winona earns $900 per week working for the springfield Meidcal Clinic.
Kevin earns $480 per week working for Little Havana.
Which of the elements in this scenario represent a flow from a firm to a household? This could be flow
of money, inputs, or outputs. Check all that apply.
The $480 per week Kevin earns working for Little Havana
The mojito Winona receives
Quantity Demanded
The amount of a good that buyers would choose to purchase given the constraint they face
Demand Schedule
A table showing the relationship between the price of a good and the amount that buyers would choose
to purchase at a variety of prices.
Law Of Demand
The claim that, with other things being equal, the quatity demanded of a good falls when the price of
that good rises.
Demand Curve
, A graph showing the relationship between the price of a good and the amount that buyers would
choose to purchase at a variety of prices.
Your professor claims that one of the curves found on the following graph correctly illustrates the
demand curve for cans of soda:
Because you understand the law of demand, you can deduce that the correct graphical representation
of the demand for soda must be D1. Moreover, you know that at a price of $1.00 per can, the quantity
of cans of soda demanded is 5 million per yr.
Supply Curve
A graph showing the relationship between price of a good and the amount of it that sellers would
choose to sell at a variety of prices.
Law of Supply
The claim that, other things being equal, the quantity supplied of a good increases when the price of
that good rises
Supply Schedule
A table showing the relationship between the price of a good and the amount of it that sellers would
choose to sell at a variety of prices.
Quantity Supplied
The amount of a good that sellers would choose to sell given the constraints they face.
If Crystal's boss is interested in a graphical representation of the relationship between the price and
quantity of televisons supplied, you should advise Crystal to construct a ___________ using the data
provided.
A supply Curve
However, if Crystal's boss is more interested in the detailed date used to construct this visual
representation, you should instead advise Crystal that a _________ would be more appropriate.
Supply Schedule
arrows shows the flow of money, and the inner (red) set of arrows shows the corresponding flow of
inputs and outputs.
Based on this model, firms earn revenue when households purchase goods and services in product
markets.
Winona earns $900 per week working as a doctor for the Springfield Medical Clinic. She uses $8 to order
a mojito cocktail at Little Havana. Little Havanna pays Kevin $480 per week to wait tables. Kevin uses
$400 to purchase medical services from the Springfield Meidcal Clinic.
Which of the events in this scenario occur in resource markets?
Winona earns $900 per week working for the springfield Meidcal Clinic.
Kevin earns $480 per week working for Little Havana.
Which of the elements in this scenario represent a flow from a firm to a household? This could be flow
of money, inputs, or outputs. Check all that apply.
The $480 per week Kevin earns working for Little Havana
The mojito Winona receives
Quantity Demanded
The amount of a good that buyers would choose to purchase given the constraint they face
Demand Schedule
A table showing the relationship between the price of a good and the amount that buyers would choose
to purchase at a variety of prices.
Law Of Demand
The claim that, with other things being equal, the quatity demanded of a good falls when the price of
that good rises.
Demand Curve
, A graph showing the relationship between the price of a good and the amount that buyers would
choose to purchase at a variety of prices.
Your professor claims that one of the curves found on the following graph correctly illustrates the
demand curve for cans of soda:
Because you understand the law of demand, you can deduce that the correct graphical representation
of the demand for soda must be D1. Moreover, you know that at a price of $1.00 per can, the quantity
of cans of soda demanded is 5 million per yr.
Supply Curve
A graph showing the relationship between price of a good and the amount of it that sellers would
choose to sell at a variety of prices.
Law of Supply
The claim that, other things being equal, the quantity supplied of a good increases when the price of
that good rises
Supply Schedule
A table showing the relationship between the price of a good and the amount of it that sellers would
choose to sell at a variety of prices.
Quantity Supplied
The amount of a good that sellers would choose to sell given the constraints they face.
If Crystal's boss is interested in a graphical representation of the relationship between the price and
quantity of televisons supplied, you should advise Crystal to construct a ___________ using the data
provided.
A supply Curve
However, if Crystal's boss is more interested in the detailed date used to construct this visual
representation, you should instead advise Crystal that a _________ would be more appropriate.
Supply Schedule
