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morpeh [17]
3 years ago
11

What is the purpose of the "circular flow model of a market economy?"

Social Studies
1 answer:
Yuri [45]3 years ago
3 0
Two basic types of markets exist in any market economy: resource markets and product markets. The exchanges that take place in these markets benefit both the households and the firms that engage in exchanges. This lesson will introduce the circular flow of money, resources and goods and services in a market economy.
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Entrepreneur risk is the chance of profit or loss that results from doing business. The risk of loss may consist in a loss of the equity capital employed, but also when the success of employing the entrepreneurial staff is uncertain.  The general entrepreneur risk manifests itself in the danger that the actual future overall development of the company deviates unfavorably from the planned data.

Therefore, in the hypothesis of the question, if Adrian did not buy the good for its high cost, he would be avoiding the risk of losing money in a bad investment. In turn, if he shared the expense with his brother, he would be sharing that risk.

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