Practice 2.1.3

Read this article about the history of Starbucks Corporation from HistoryLink.
org: "Starbucks:
The Early Years" by Sheila Farr. As you read, find at least one example of every major group in a
typical circular flow diagram, including:
● A business
● A resource market
● A household
● A product market
Also find examples of a resource, good, service, or dollar amount that flowed between each of
the four groups you identified. More specifically, these examples should include:
● A resource from a resource market that a business used

● A productive resource (labor) that a household supplied to a resource market
● An expenditure a household made by buying a product
● A product a household bought from the product market
● Revenue a business made from the product market
● A good or service a business provided to the product market
Once you have identified at least one example for each item in the list above, fill out the blank
circular flow diagram below.
Keep in mind that the reading may provide multiple examples for each item. You only need to
mention one or two examples, but make sure they are clear so your instructor can easily find
them in the article. Also keep in mind that since the "income" and "wages, interest, net profit"
categories are not explicitly mentioned in the reading, these details have been filled in for you. (4
points)
Having hard time editing the graph, so I will just write it below.
Product Market: Starbucks first started to sell just the finished beans to customers, and in 1982
they sold their first brewed coffee at a store.
Resource Market: An example of this was when Starbucks sold coffee beans roasted by the
company Peets.
Business: Selling coffee and coffee beans, eventually selling more drinks and types of food.
Also they sell cups and things as well.
Household: Gordon Bowker, Jerry Baldwin, and Zev Siegl were the household of starbucks.
Expenditures: An example was when their first customer entered, they got a pound of sumatra
beans and something else and wrote a check for $5.36.
Revenue: After the first nine months Starbucks made $46.832. After expenses there wasn’t
much left.
Products: Coffee and coffee beans then. Now all kinds of drinks also, merchandise, and food.
Goods/Services: Starbucks sells goods in order for profit.
Resource: Labor can be a resource, including the employees that work and make the drinks and
their effort and talent.
Productive Resources: Thinks of business idea, uses land/store to sell products, open new
stores, use employees to work and be able to expand stores.
Section 2: Analyzing a Circular Flow Diagram
1. If you were a Starbucks customer, where would you fit in this circular flow diagram? Where
would you fit if you were a Starbucks employee? Explain which steps on the diagram you would
affect in these roles and why. (2 points) If I were a starbucks customer I would fit in the product
market, product, and goods and services. I would spend money at Starbucks in order for them
to make money. This would affect the revenue of the product market for Starbucks. If I were an
employee of Starbucks I would fit into the resources, productive resources, goods and
services, and business.The quality of my work would affect the labor market. If my work is not
up to standards the product will be worse, which would affect the amount of customers that
buy the product.

2. Categorize the resource markets you listed in your circular flow diagram. Are they banks,
suppliers of raw resources, labor agencies, land, or something else? (2 points) Banks and raw
material suppliers make up the resource market for Starbucks. An example I used in the
diagram was when starbucks sold the company Peets roasted coffee beans. This benefited
both Starbucks and Peets because they both got to gain an income from this collaboration.
Banks can help Starbucks by allowing them to take out loans and buy a place to sell their
product from.
3. What were some examples of groups or resources that were hard to classify in your circular
flow diagram? For example, did any groups function as both a business and a resource market?
Give two examples and explain why they defied classification. (2 points) Employees fit in the
product and resource market because they provide the service of providing the product in the
product market, and are hired by Starbucks in the resource market.

Practice 2.1.3

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Practice 2.1.3

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Read this article about the history of Starbucks Corporation from HistoryLink.

typical circular flow diagram, including:

● A resource from a resource market that a business used

circular flow diagram below.

Section 2: Analyzing a Circular Flow Diagram

buy the product.

product market, and are hired by Starbucks in the resource market.

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