Final answer:
Denny's receipt of $50 for landscaping services is represented in the circular-flow diagram within the product market, where households pay firms for goods and services. Simultaneously, it illustrates his participation in the labor market, supplying labor in exchange for income.
Step-by-step explanation:
The question revolves around the circular-flow diagram, which demonstrates the economic interactions between households and firms within the markets for goods and services and labor. In the case described, where Denny, the owner of a landscaping business, has received $50 for mowing Mrs. Pendleton's lawn, the transaction is represented within the circular-flow diagram as a part of the product market.
Firms provide goods and services, which they sell to households and, in turn, receive revenue. This dynamic is illustrated by the outer circle of the diagram. Conversely, households supply labor to firms and are compensated with wages, salaries, or benefits, which is depicted in the inner circle, representing the labor market. Therefore, in exchanging his landscaping services for payment, Denny engages in both circles of the diagram: he supplies a service within the product market and receives income that reflects his participation in the labor market.