Explain the Structure of the Circular Flow Model

question 135

Essay

Explain the structure of the circular flow model.

Differentiate between appropriate and inappropriate uses of power and influence tactics in work settings.

Grasp the significance of task-relevant knowledge and skill as sources of personal power in organizations.

Comprehend the role of reward and coercive power in leadership and its evolution over time.

Acknowledge the importance of character, integrity, and role modeling in referent power.

---

Definitions:

Spillover Cost

A cost incurred by someone who did not choose to incur that cost.

Allocative Efficiency

A state of the market where resources are allocated in a way that maximizes the net benefit to society.

Productive Efficiency

Productive efficiency occurs when an economy is operating at its maximum capacity, producing goods and services at the lowest possible cost per unit.

Marginal-Cost-Marginal-Benefit Rule

The marginal-cost-marginal-benefit rule states that optimal decision-making occurs when the marginal cost of an action equals its marginal benefit, ensuring efficient resource allocation.