Consider the market for apple. Draw its Circular-Flow diagram with explained details. Why this diagram is...

Consider the market for apple. Draw its Circular-Flow diagram with explained details. Why this diagram is so important in Economics?

Expert Solution

in the apple market generally two sectors can be classified as

producer sector - producer sector is that sector in the economy which undertakes the production process in the economy and supplies the final good (apples) to the household sector in the economy.it also makes the payment for the factors of productions.
household sector- household sector provide factor of production such as labor,land capital and entrepreneur and pay for the apples to the producer sectors.

importance of circular flow diagram in the economy

it shows a relationship between producer and household sectors.
it shows the mutual interdependency of both the sectors
it reveals in practical term the working of economy.

Rahul Sunny answered 2 years ago

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