Y8/9 Circular Flow Economics

Define resources

• Items used in the production of goods and services.

• Production of goods and services by firms.

• Payment received by workers when employed by firms.

• Spending by households on goods and services.

Payment received by workers

The purchase of goods and services

They are responsible for the production of goods and services

The owners of resources

Refers to the production of goods and services

Explains the relationship between households and firms

Define opportunity cost

• Items used in the production of goods and services

• Unlimited wants, limited resources

• The real cost of the next best alternative foregone.

• Spending by households on goods and services.

The relationship between producers and consumers can be demonstrated through the

• Brainstorm

• PPF Model

• Economic Problem Flowchart

• Simple Circular Flow Model

The main goal of a business is to

• Maximise profit

• Maximise revenue

• Lower costs

• Sell a lot of products