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February 13, 2026 

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GOVERNMENT POLICIES: Government actions designed to affect economic activity and pursue one or more economic goals. Also called economic policies. The four common types of government policies are: fiscal, monetary, regulatory, and judicial.

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AVERAGE PRODUCT CURVE: A curve that graphically illustrates the relation between average product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit output at each level of the variable input. The average product curve is one of three related curves used in the analysis of the short-run production of a firm. The other two are total product curve and marginal product curve. To be quite honest, the average product curve is the least important of the three for economic analysis. Economists are generally more interested in totals and marginals than averages.

     See also | average product | curve | total product | output | input | variable input | fixed input | marginal product | average cost | law of diminishing marginal returns | average-marginal rule | short-run production | average physical product |


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PHYSICAL FLOW

In the circular flow model, the transfer of goods and services from the business sector to the household sector and the transfer of resource services from the household sector to the business sector. The physical flow is usually illustrated as a counter-clockwise flow for a model with the product markets at the top, resource markets at the bottom, household sector at the left, and business sector at the left. The payment flow moves in the opposite direction.

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