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Let's put dollar amounts on the flows in the circular flow diagram below. FIGURE 2-2 The Circular Flow Diagram Factors of production flow from households to businesses through the factor market, and products flow from businesses to households through the product market. Opposite these real flows are monetary flows. Households receive income from businesses (their costs) through the factor market, and businesses receive revenue from households (their expenditures) through the product market. FACTOR Money inco Costs MARKET 4 production . Households sell Flew's buy Labour, land, c income (wages, rents, Factors of or preneurial capital, entre- wrial ability BUSINESSES HOUSEHOLDS Buy factors of . Sell factors of production production Sell products Buy products we spoon services and services PRODUCT MARKET Goods and set expenditures . Firms sell revenue Households buy Consumption exper a. Suppose that businesses buy a total of $130 billion of the four resources (labour, land, capital, and entrepreneurial ability) from households. If households receive $72 billion in wages, $16 billion in rent, and $26 billion in interest, how much are households paid for providing entrepreneurial ability? $ billion for entrepreneurial ability b. If households spend $70 billion on goods and $60 billion on services, how much in revenues do businesses receive in the product market? S billionSuppose there are three buyers of candy in a market: Tex, Dex, and Rex. The market demand and the individual demands of Tex, Dex, and Rex for candy are given in the table below. a. Fill in the table for the missing values. Price Tex Dex Rex Total Quantity per Candy Qa Demanded $19 4 3 3 18 6 4 17 17 5 11 24 16 10 15 31 15 12 7 19 b. (i) Which buyer demands the least at a price of $16 (ii) Which buyer demands the most at a price of $18? c. Which buyer's quantity demanded increases the most when the price is lowered from $18 to $17 (in absolute terms)? d. (i) Which direction would the market demand curve shift if Tex withdrew from the market? (ii) Which direction would the market demand curve shift if Dex doubled his purchases at each possible price? e. Suppose that at a price of $17, the total quantity demanded increases from 24 to 34. Is this a "change in the quantity demanded" or a "change in demand"?Demand and supply often shift in the retail market for gasoline. Here are two demand curves and two supply curves for gallons of gasoline in the month of May in a small town in New Brunswick. Quantities Demanded Quantities Supplied Price DJ P2 $1 $2 $6.00 5,000 7,500 9,000 9,500 1, 000 3,000 1,000 9,000 1.00 1,500 3,500 9,000 5,000 a. Use the following facts to fill in the missing data in the table. . If demand is D1 and supply is S1. the equilibrium quantity is 7,000 gallons per month. When demand is D2 and supply is S1, the equilibrium price is $5.00 per gallon. When demand is D2 and supply is $1 , there is an excess demand of 8,000 gallons per month at a price of $3.00 per gallon. . If demand is Dj and supply is $2 , the equilibrium quantity is 8,000 gallons per month. Instructions: Fill the missing data In the table above. b. Compare two equilibriums. In the first, demand is Dy and supply is $1 . In the second, demand is Dy and supply is $2. By how much does the equilibrium quantity change? By how much does the equilibrium price change? Equilibrium quantity gallons per month. Equilibrium price by $ c. If supply falls from $2 to S, while demand declines from D2 to Dy, does the equilibrium price rise, fall, or stay the same? The equilibrium price What If only supply falls? The equilibrium price, What If only demand falls? The equilibrium price d. Suppose that supply is fixed at S, and that demand starts at D1. By how many gallons per month would demand have to increase at each price level such that the equilibrium price per gallon would be $5? gallons per month By how many gallons per month would demand have to increase at each price level such that the equilibrium price per gallon would be $6? gallons per month