The Market Phenomenon
How is the market economic system
and the circular flow model linked?
Objectives
• Understand and explain a market and its role
in the market economic system
• Understand the “circular flow” of the market
system by creating a graphic organizer of the
flow
• Compose a narrative of the “circular flow”
What 2 factors
do ALL markets
share?
Times Square, N.Y.C.
•“district was a mecca for family-oriented tourism and entertainment…”
Chandni Chowk, Delhi
“…might actually be possible to get anything
in Chandni Chowk: from made-to-order
wedding dresses to exotic fruits to
refurbished secondhand shoes.”
Marrakech, Morocco
•Largest market place in Africa
Hong Kong
•One of Asia’s largest markets
•Serves the largest population in the world
•What factors did you see???
4 Points of the “Circular Flow”
• All dependant on market activity to drive
system…exchange goods/services
• Buyers and sellers to meet and exchange product
1. Factor Market
2. Business
3. Product Market
4. Individuals
– No specific order…all components critical
Specifics…
• Factor markets:
– Where individuals earn an income
– 4 factors of production (C.E.L.L.) are bought and sold
– You/your parents work place
• Product market:
– Use income to acquire good/services here
– $ returns to businesses (factor markets)
• This creates an infinite cycle where wages are
exchanged and go on to create more and more
goods/services
Watch…
• https://www.youtube.com/watch?v=Hfz1bwK
5C4o
• How are individuals and businesses (firms)
linked in the market system?
Act…
• Create a graphic organizer of the “circular
flow”
• Compose a brief narrative of the “flow”
Intro…
• Exchange your narrative with someone near
you
• Come up and grab a red, blue (or black) pen,
and a highlighter
• Read your partners narrative and identify the 4
pieces of the circular flow model
– Red for business
– Blue for individual
– Yellow for product market
– Circle for factor market
“FLOW” Activity
• Moving around the school to 2 different
locations in order to highlight the “circular
flow” of the market economy
• Complete the sheet as you move
• Find the posted explanation of each location’s
relation to the “circular flow” and read it to
your group
• 25 MINUTES TO COMPLETE!!
Intro: Mock-market interaction
• Grab a sheet from the front and get into
groups
• Read the directions and get started
Objective:
• Understand the two types of markets
• Understand how individuals and businesses
are both buyers and sellers
Reflection Questions
• With a partner grab a white board, marker
and eraser
• I will give out 1 point for the best answer to
each question…winning pair will receive a
prize
• Ready to begin?
Question #1
• How does the market economic system and
the “circular flow” overlap?
Question #2
• How does your paycheck fit into our larger
market economy?
Question #3
• During the “Circular Flow” of Conestoga
activity, your physical movement around the
school was the equivalent of what in the real
world?
Question #4
• Where is the governments role in our market’s
“circular flow”? Answer and give a specific
example.
Question #5
• How could a labor strike effect our community
here in Berwyn?
Question #6
• On a scale of 1-10, how important is freedom
in a market economy?
Question #7
• Which of the 4 pieces of the “circular flow” is
the most crucial to the system?
Question #8
• Explain the role a website like E-bay or
Amazon plays in the “circular flow.”
Question #9
• Command Example…
• Why does a market system overcome the
command system’s shortcomings?
Question #10
• Why is it important to understand the “circular
flow” of our economy?