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Safari File Edit View History Bookmarks Window Help ng.cengage.com k -2018FA-ECON-2302-51428 5% MNDTAP From Cengage Homework (Ch 02) The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Markets for Goods and Services Firms Markets for Factors of Production Based on this model, households earn income when in factor markets. Suppose Frances earns $850 per week working as an analyst for A-Plus Accountants. She uses $10 to get her car washed at Spo Spotless Car Wash pays Dmitri $425 per week to wash cars. Dmitri uses $250 to purchase tax services from A-Plus Accountants Identify whether each of the following events in this scenario occurs in the factor market or the product market Event Factor Market Product Market

Explanation / Answer

Households earn income when firms purchase labor or markets in factor markets.
Frances spends $10 to get her car washed is product market
Dimitri earns $425 per week is Factor market
Frances earns $850 per week is Factor market
Option 2 and 4 as the households receives services and money from product market (firm to household)

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