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The circular flow diagram is used to represent the interdependence that exists between sectors of the economy. The diagram illustrates that there are various collections of same economic agents, called sectors. Households provide resources to government and business and consume the outputs of these other sectors. The markets in which land, labor, capital, and entrepreneurial talent are sold are known as resource markets. The markets in which the output of business and in similar cases government is sold are known as product markets.
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what is the theory of second best?prove the theorm with the help of diagram?
Assume that John has the following preference relation over two goods, bread and bear (x1, x2). He strictly prefers any bundle x over y whenever x haves more bear than y, whatever
what is the theory of second best? prove the theorem with the help of a diagram.
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