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Transcript
Circular-Flow of Economic
Activities
Economic Agents:


Households: do consumption decision and are the owners of
factors of production


Aim: maximize utility
Firms: rent or employ the factors of production and do the
production decision

Aim maximize profits
Where they interact:



Markets for goods and services
Markets for factors of production
Market
not a place but a mechanism bringing seller and buyer
together
Price mechanism allocates the resources