Review Unit 3 Concept 1

A simple economy is based on the interaction between two sectors: households and businesses. They each need each other to function.

• True
• False

________________ are the owners of the productive resources (factors of production) in the circular flow model. They sell their land, labor, capital, and entrepreneurship in the _____________ ______________ in exchange for income payments.

• Businesses/product market
• Businesess/resource market
• Households/product market
• Households/resource market

________________ are the consumers of the productive resources (factors of production) in the circular flow model. They purchase the use of land, labor, capital, and entrepreneurship in the _____________ ______________ .

• Businesses/product market
• Businesess/resource market
• Households/product market
• Households/resource market

__________________ are the consumers of goods and services in the circular flow model. They spend the income they earn to buy goods and services in the _____________ ________________ .

• Businesses/product market
• Businesess/resource market
• Households/product market
• Households/resource market

__________________ are the producers of goods and services in the circular flow model. They sell goods and services in the _____________ ________________ .

• Businesses/product market
• Businesess/resource market
• Households/product market
• Households/resource market

In the resource market, the payments for resources have specific names. Match the following resource to its payment type: land.

• interest
• wages
• profit
• rent

In the resource market, the payments for resources have specific names. Match the following resource to its payment type: labor.

• interest
• wages
• profit
• rent

In the resource market, the payments for resources have specific names. Match the following resource to its payment type: capital.

• interest
• wages
• profit
• rent

In the resource market, the payments for resources have specific names. Match the following resource to its payment type: entrepreneurship.

• interest
• wages
• profit
• rent

The _____________________ says that as the price of a good rises, the quantity of the good consumers are willing and able to buy will decrease.

• law of supply
• market equilibrium
• law of demand
• circular flow diagram