Answer to Question #258266 in Microeconomics for aifa

Question

a circular flow diagram selena pays a storekeeper for a quart of milk

Answer 1

Complete Question

Draw a circular-flow diagram. identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities

a. selena pays a storekeeper $1 for a quart of milk

Solution

A circular flow diagram is a graphical representation of flow of goods nd services, factor of production, spending and revenues between different sections of an economy.

a.

selena is a household; she buying milk (good) from the storekeeper (firm) in the market for goods and services.

Selena's spending is revenue to the firm.