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:
Process Innovation
The introduction of a new or significantly improved production or delivery method to reduce costs, improve quality, or produce a good or service more efficiently.
Economies of Scale
Refers to the cost advantage that arises with increased output of a product, where the average cost per unit falls as scale of production increases.
Lower-Cost Method
A cost-minimization strategy that involves choosing the most economical options in order to reduce expenses and improve efficiency.
Process Innovation
The implementation of a new or significantly improved production or delivery method.
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