Information Technology Solutions
CIRCULAR FLOW DIAGRAM
NAME
AADIL SAEED MINHAS
REGISTRATION NO:
CIIT/SP-14/BBA-1C/014/ISB
SUBJECT:
MICRO-ECONOMICS
SUBJECT TEACHER:
NAEEM AHMED
After graduation, I will exist in the all
these parts of this diagram.
As Households:Obviously I will be a
part of household to spend toproduct
market and get the things to meets my
needs.
As Businesses/firms: As an employee
of my firm I will provide goods and
services to product market and in
result to get revenue for firm to makes
it profitable.
As Product Market: If I lay in this
part, then I will fetch services from
firms and provide to the households.
The Circular Flow
This diagram is a schematic
representation of organization of
the economy. Decisions are made
by households and firms.
Households and firms interact in
the markets for goods and
services(where households are
buyers and firms are sellers)and
in the markets for the factors of
production (where firms are
buyers and households are
sellers). The outer set of arrows
shows the flow of dollars, and
the inner set of arrows shows the
corresponding flow of inputs and
outputs.
Becausehouseholds are spending
their money to earn them.
As a Factor Market: As a part of
factor market I have to play a vital
role. Get land, labor capital and
entrepreneurship form humans and
utilize them in the favor of firms to
give them inputs for production and
in return get wages, profits($) and
GDP. And then give income to
Household to run the house
economy.