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Flashcards based on the lecture notes covering the Division of Labor and the Circular Flow Model in economics.
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What is the Division of Labor?
Breaking down the production process into distinct tasks performed by different workers.
What are the benefits of Division and Specialization of Labor?
Increased production output, specialized skills, and improved business efficiency.
How does the Division of Labor increase production output?
Allows workers to focus on specific tasks and be more productive.
What is the role of households in the Circular Flow Model?
Households consist of individuals who own resources, sell them in the resource market, and earn income to purchase goods and services.
How do businesses interact with households in the Circular Flow Model?
Businesses produce goods and services, sell them to households, and buy resources from households.
What is the Market for Resources?
A market where households sell resources and businesses buy them.
What is the Market for Goods and Services?
A market where businesses sell goods and services and households buy them.
Where does money flow in the Market for Resources?
Money flows from businesses to households in exchange for resources.
Where does product flow in the Market for Goods and Services?
Products flow from businesses to households in exchange for money.
What is the primary function of businesses in the economy?
Businesses produce goods and services and sell them to earn revenue.