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How do firms and households interact within the context of the circular flow model?
Profit
The financial gain that results when the revenues generated from business activities exceed the expenses, taxes, and costs incurred.
Competitive Market
A market structure characterized by many buyers and sellers, where all entities have little to no power to influence prices or market conditions.
Transaction Costs
Transaction costs are expenses incurred when buying or selling goods or services, including the costs of searching for information, negotiations, and enforcement of contracts.
Spread
The difference between two values, such as the bid and ask prices in financial markets, or the range in statistical data.
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