BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Within the model, individuals are considered to be both the possessors of factors of production (such as labor, services or property) and as consumers, the purchasers of goods. Companies are considered to be both the producers of goods and the purchasers of factors of production.

Detailed explanation-2: -The factors of production include land, labor, capital and entrepreneurship. The prices that correspond to these factors of production are rent, wages and profit. People in households buy goods and services from businesses in an attempt to satisfy their unlimited needs and wants.

Detailed explanation-3: -Real flow refers to the flow of goods and services across different sectors of the economy. Flow of factor services from household sector to the producer sector or flow of goods and services from producer sector to household sector are examples of real flows. Was this answer helpful?

Detailed explanation-4: -Factor markets are markets in which households supply factors of production-labor, capital, and natural resources-demanded by firms. Our model is called a circular flow model because households use the income they receive from their supply of factors of production to buy goods and services from firms.

Detailed explanation-5: -Consumer spending-> Revenue-> Cost-> Income This is the basic circular flow diagram.