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. Markets for Goods and Services Firms Households Markets for Factors of Production Based on this model, households earn income when purchase in factor markets. firms Suppose Teresa earns $875 per week working as a d ney for Rowan and Martin Associates. She uses $9 to order a mojito cocktail at Little Havana. Little Havana pays Sam $350 per week to w households m uses $200 to purchase legal service from Rowan and Martin Associates.

Homework 8 Spring 2024: 1. Complete the table below Quantity TCC TVC TC MC AVC ATC 01234561 12 0 -- -- -- 12 20 12 12 46 16 12 20 12 20 12 22 7 12 24 8 12 26 9 12 28 10 12 30 11 12 32 12 12 34 2. Using the table above, create a graph with Quantity on the horizontal axis and dollars on the vertical axis showing the curves for MC, AVC, and ATC. Make 3 copies of this graph for use in problems 3, 4, and 3. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $18 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produces the quantity where MR=MC, designate rectangles for: total revenue, total cost, and total variable cost. Explain, in terms of the relative sizes of the total revenue and total variable cost rectangles, why the firm should continue to operate in the short-run. Designate on the graph the area that represents the…

Suppose the following transactions occur during the current year: 1. Darnell orders 50 bottles of wine from a French distributor at a price of $30 per bottle. 2. A U.S. company sells 300 spark plugs to a Korean company at $5.00 per spark plug. 3. Jacques, a U.S. citizen, pays $670 for a skateboard he orders from Wally's (a U.S. company). Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year. Hint: Be sure to enter a "0" if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative. Consumption Investment Government Purchases Imports Exports Net Exports Gross Domestic Product (GDP) Amount (Dollars)

Using the language of and components of the circular flow diagram, Answer the following questions: 1)Which institution or group of institutions of the circular flow model is missing? Explain how you might include those groups into this model. 2)In what way our business and households both sellers and buyers in this model? 3)What are the flows in this circular flow model? 4)