Minhyo+Moon+Project

=Circular Flow of Economy with J.J. Catering=

In Korea International School, there is a catering group installed in its cafeteria to provide lunch and snacks for the students during lunchtime and pass-by breaks. Even though it may seem nothing but a food providing system, yet it has clear evidence of economical strategies and a distinct flow of money, the circular flow of income and output.

About now people will be wondering, what is the circular flow of income and output? In definition, it basically describes the reciprocal model of income between consumers and producers. But how does this relate to school’s catering group, which makes lunches and sells snacks? As you read this analysis, you will find out how J.J. Catering relates to the circular flow of income and output in KIS.

In the Circular flow of money model, there are many different ways to interpret the diagram, but the core idea is to distinguish who are the Firms, and who are the households. The ideas start in the two distinguished characters. As you can see from the below diagram, there are two different colored lines going in different direction. The blue line represents the circular flow of income, while the yellow line represents the flow of output. In another words, you can see the blue line as money, while the yellow line as physical items that were made.

Here is the Analysis of the graph

//__-Flow of Dollars__//
1. Households spends money on buying goods and services from the product market which moves the money towards the product market.

2. The product market makes money and revenues from the purchases made by the households and benefits from it. Then these revenues are given to firms who managed on producing the goods that were supposed to be sold in product markets.

3. From the revenues earned by the product market, firms uses the money on wages, rents, and interests for the factor market, which is where most workers work and produce these goods that are to be sold in Product markets.

4. From these Factor Markets, money is earned and income is gained. These income flows back to Households, since workers are basically consumers of goods. From this income, households are able to make purchase for the needed goods from the product market, creating a circulation

__//**-Flow of Output**//__
1. Also starting from Households, as you can see, households provide Labor, Land, Capital, and Entrepreneurship to the Factor Markets. People are all consumers, and People are workers at the same time, therefore workers are consumers.

2. These workers are bought into firms, and factories, in another words, providing inputs of production for the firms. Firms use these workers and other inputs to produce goods and services.

3. Those firms who managed to produce good products sell their products to product market, where Firms are actually able to sell their produced goods and services

4. From the product market, households purchase goods and services into their house for the need of these goods, and manage a living. From this, households are able to provide labor, capital, etc.

Q: Then what does this graph have to do with anything in our school?
That was the simple overview of the graph. Now, to relate these given criteria to the school’s lunch program, J.J. Catering is nothing different. Taking J.J. catering as the Firm, and the school and its students as the households, the circular diagram can be matched.

//__Moneywise__//
1. J.J. Catering, or the firm, just like the original graph, provides wages, rents, and interest to the ahjummas working in the cafeteria, making and serving food they made.

2. From these ahjummas and faculty workers, they are able to spend the money they gained and pass it onto the households where they can buy and spend on the food that J.J. Catering makes.

3. These spending from students, faculty and ahjummas provide a revenue for the cafeteria that school provides, which is a considerable amount of money. From the cafeteria, the revenue is moved onto J.J. Catering, which uses the revenue to profit, then give wages, rent, and interests all over again.

//__Output wise__//
1. Households, referring to the faculty and students in the school, land, labor, and capital for the product market, ultimately firms.

2. From the provided land, labor, and capital, firms are able to make and produce food in the cafeteria, or the product market, providing goods and services.

3. From the cafeteria, the students and faculty purchase the foods that are produced and this creates another circulation of economy in KIS



=__//Conclusion//__= The world is in a economical crisis, and so are we, and the J.J. Catering. There is not a day, where one should recluse his or herself from going to the cafeteria, and purchasing even a single bottle of water. After this analysis, students and teachers should become aware that every action we take in the school, is very much related to the effect it will give off to the workers behind the scenes. I believe, we students should stop worrying and complaining about the price of our lunch, and eat food from the cafeteria more frequently, helping out those kind ahjummas who so kindly serve us food.