T IO

CIRCULAR-FLOW UC I
O D O M
DIAGRAM R N
IN T C O
Markets for good and E
services Nto CS
Created by Fuad&Sevinc
 CONTENTS

1. WHAT IS “CIRCULAR-FLOW DIAGRAM”?

2. FIRMS AND HOUSEHOLDS
3. PRODUCT MARKET
4. WHAT IF…?
5. REFERENCES

2
CIRCULAR-FLOW DIAGRAM #1
PRODUCT
MARKET
Goods& Pro
t duc
t pu Services
t s
Ou
FIRMS HOUSE
HOLDS
Producers&
Businesses Consumers

pital
Inp r, Ca
ut abo
d,L
RESOURCE Lan
MARKET
Labor 3
 #2-
CIRCULAR-FLOW
DIAGRAM 3
It is the relationship
between 4 variables
which are

HOUSE PRODUCT RESOURCE

FIRMS MARKET MARKET
HOLDS
4
 HOW DO COSTS, REVENUE, AND CONSUMER SPENDING RELATE TO THE CIRCULAR
GENERAL VIEW
FLOW MODEL?

CONSUMER
REVENUE COST INCOME
SPENDING

This is the basic circular flow diagram

5
OUR RESEARCH

THIS FIRM IS SEWING

CLOTHES FOR SALE.
AND THE PRODUCTION
PROCESS COSTS
APPROXIMATELY 20-25 FROM
AZN. FIRM
.
.
.
.
.
.
THEN FIRM SELLS TO
THEIR CLOTHES IN THE PRODUCT
“MODA GRAND” OR MARKET
“CESUZI” FOR 35 AZN.
6
Turkey China Bine Bazari Sederek Bazari Resource Market
Sede
rek
Baza
ri
[PER
CEN
TAG Turk
E] ey
[PER
CEN
TAG
E]
Bine Chin
Baza a
ri [PER
[PER CEN
CEN TAG
TAG E] 7
E]
What if the FIRMS component was removed from the #4
diagram?
EXAMPLE “AZERSUN” BECAME BANKRUPT

There would
be no one to
make goods
or provide
services

8
What if the PRODUCT MARKET component was removed
from the diagram?
EXAMPLE “BRAVO” BECAME BANKRUPT

There would
be no one to
connect the
producer
and the
consumer

9
What if the HOUSEHOLDS component was removed from the
diagram?
EXAMPLE THERE ARE NO PEOPLE TO BUY PRODUCTS

There would
be no one
giving the
labor
resource to
the resource
market.

10
What if the RESOURCE MARKET component was removed
from the diagram?
EXAMPLE NO RESOURCES

Producers
would need
to find the
resources
they needed

11
 EXAMPLE https://www.youtube.com/watch?v=o3gZIlJjW_g

MURAD ATTEMPTS TO SELL HIS POWER SUCH AS LABOR

“AZERSUN” IS PRODUCER AND GIVES MURAD’S LABOR IN

EXCHANGE FOR MONEY

“AZERSUN” SUPPLIES ITS PRODUCTS TO “BRAVO”

SUPERMARKET CHAIN

IN ORDER TO BUY “AZERSUN”S PRODUCTS, MURAD HAS 12

TO GO TO “BRAVO”
 #5
REFERENCES
 https://www.myaccountingcourse.com/accounting-dictionary/circular-flow-model
 https://policonomics.com/circular-flow-diagram/
 https://www.investopedia.com/terms/circular-flow-of-income.asp
 https://study.com/academy/lesson/circular-flow-diagram-in-economics-definition-exa
mple.html
 https://www.thoughtco.com/the-circular-flow-model-of-the-economy-1147015
 https://www.masterclass.com/articles/understanding-the-circular-flow-model-in-econ
omics#what-is-the-circular-flow-model-in-economics

13
THANKS FOR WATCHING!
T IO
UC I
Created by Fuad&Sevinc
O D O M
T R O N
N
I EC
Nto CS