Question

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. the $225 tim spends to purchase air travel to hawaii from flyaway airlines the $500 per week tim earns working for little havana alyssa's labor?

Answer 1

A flow from a household to firm means that the household (consumer, individual, or however you prefer to call it) transfers wealth (money, input, or product) to the firm (business, company, factory).

A) If Tim buys a plane ticket to Hawaii, he is transferring money to a company, the airline. This represents a flow from a household (Tim) to a firm (the airline).

B) I assume Little Havana is a company, perhaps a restaurant or hotel. If Tim works for this company and earns a wage, so he is providing an input, labor. This represents a flow to the firm. However, the $500 Tim earns is a flow from the firm (Little Havana) to the household (Tim), not the other way around.

Therefore, A is an example, B is not.