Circular Flow- It represents a transaction in a company.
There are 2 markets:
1) Product Market- This is the place where goods and services are produced by businesses and they are bought by households.
2) 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.**
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