Introduction to Economics

Interactive learning: Circular Flow & Production Possibilities

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Markets for Goods & Services Markets for Factors of Production Firms Produce goods Use inputs Households Own factors Consume goods Goods and services sold Goods and services bought Labor, land, and capital Factors of production Revenue Spending Income Wages, rent, and profit
Flow of money
Flow of goods, services, & factors

The Circular Flow of the Economy

This diagram shows how money, goods, services, and factors of production flow between households and firms through two types of markets. Click on any element to learn more!

Choose Your Production

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Current Point

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Opportunity Cost

Key Concepts

Efficient: On the curve - using all resources optimally.

Inefficient: Inside the curve - resources are underutilized.

Unattainable: Outside the curve - not possible with current resources.