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The circular-flow diagram has two loops to illustrate the flows of:
Asymmetric Information
A situation in which one party in a transaction has more or superior information compared to another, often leading to an imbalance in the transaction.
Sole Proprietorship
The simplest form of business organization in which the owner is the business. Anyone who does business without creating a formal business entity has a sole proprietorship.
Professional Corporation
A type of corporation for professionals such as lawyers, doctors, and accountants, subject to specific regulatory provisions.
Business
An organization or enterprising entity engaged in commercial, industrial, or professional activities.
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