The following diagram presents a circular flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.



Based on this model, households earn income when ( A. households B. Firms) purchase (A. goods and services B. resources) in resource markets.

Suppose Sharon earns $575 per week working as a programmer for PC Pros. She uses $9 to get her car washed at Spotless Car Wash. Spotless Car Wash pays Paolo $300 per week to wash cars. Paolo uses $200 to purchase software from PC Pros.

and

1. Paolo spends $200 to purchase software from PC Pros.

- A. Resource Market? B. Product Market market?

2. Paolo earns $300 per week working for Spotless Car Wash

- A. Resource Market? B. Product Market market?

3. Sharon spends $9 to get her car washed.

- A. Resource Market? B. Product Market market?

Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.

1. The $300 per week Paolo earns working for Spotless Car Wash

2. The $200 Paolo spends to purchase software from PC Pros

3. Sharon's labor