Using the outline below,draw a circular-flow diagram representing the interactions between households and firms in a simple economy.Explain briefly the various parts of the diagram.
Definitions:
Marginal Cost
The extra expense derived from the production of an additional unit of a product or service.
Perfectly Competitive
A market structure characterized by a large number of firms selling identical products, with no single firm able to influence the market price.
Oligopolistic
Describes a market structure in which a few firms dominate the industry, leading to limited competition.
Marginal Cost
The rise in overall expenses resulting from the manufacture of an extra unit of a product or service.
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