The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Based on this model, firms earn revenue when purchase in product markets. Suppose Latasha earns $550 per week working as work as a flight attendant for Flyaway Airlines. She uses $10 to have breakfast at Dinah's Diner. Dinah's Diner pays Jake $350 per week to work as a short-order cook. Jake uses $250 to purchase air travel to Hawaii from Flyaway Airlines. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Latasha earns $550 per week working for Flyaway Airlines. Jake spends $250 to purchase air travel to Hawaii from Flyaway Airlines. Latasha spends $10 to have breakfast. Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply. The $250 Jake spends to purchase air travel to Hawaii from Flyaway Airlines Latasha's labor The breakfast Latasha receives The $350 per week Jake earns working for Dinah's Diner

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 1PA

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2. The circular-flow model

The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.

Based on this model, firms earn revenue when purchase in product markets.

Suppose Latasha earns $550 per week working as work as a flight attendant for Flyaway Airlines. She uses $10 to have breakfast at Dinah's Diner. Dinah's Diner pays Jake $350 per week to work as a short-order cook. Jake uses $250 to purchase air travel to Hawaii from Flyaway Airlines.

Identify whether each of the following events in this scenario occurs in the factor market or the product market.

Event	Factor Market	Product Market
Latasha earns $550 per week working for Flyaway Airlines.
Jake spends $250 to purchase air travel to Hawaii from Flyaway Airlines.
Latasha spends $10 to have breakfast.

Which of the elements of this scenario represent a flow from a firm to a household? This could be a flow of dollars, inputs, or outputs. Check all that apply.

The $250 Jake spends to purchase air travel to Hawaii from Flyaway Airlines

Latasha's labor

The breakfast Latasha receives

The $350 per week Jake earns working for Dinah's Diner

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