Student Worksheet

The Flow Of Income - Activity Instructions

Economists will have us believe that the flow of income is circular - money comes in, money goes out. But there’s a lot more to think about in terms of the true cost of items, like mobile phones. In this activity, you’ll explore the human and environmental costs that should also be represented in economic models.

Step 1.

Match the words below to the definitions in the table.

Natural resources Consumption Scarcity Economics Resources

Word	Definition
	The study of how individuals and groups make decisions with limited resources as to best satisfy their wants, needs and desires.
	The goods or services available to individuals and businesses used to produce valuable consumer products.
	When the demand for something is much greater than the supply, or there is not enough money to buy it.
	Natural assets (raw materials) occurring in nature that can be used for economic production or consumption.
	The using up of goods and services by consumer purchasing, or in the production of other goods.

The Flow Of Income

A basic model of the flow of income in our economy might look something like this:

This diagram shows money moving from consumers and households to businesses, with businesses providing goods and services in return.

However, as you may have guessed, it’s not as simple as that. While the flow of the economy is more complex in itself (see this image), that’s not the part you’re going to focus on. Instead you will be looking at how the flow of income in an economy isn’t actually that circular when you consider the resources used and the pollution created.

The True Cost Of Consumption

In this example, you will imagine yourself buying a smartphone.

While the smartphone might cost you a certain amount of money, you could consider the true cost to be much greater. For example:

This video (https://www.youtube.com/watch?t=68&v=8EqXQ42QAaY) has more details about the true cost of smartphones.

Step 2.

Answer the following questions using the middle column. Once complete, you could have a chat with someone at home or one of your friends online. Following this discussion, you may wish to revise your answers in the right-hand column.

Taking It Further

You can learn more about mobile phones and how to recycle them by exploring these MobileMuster lessons. You might even decide to enter their film competition!

The Flow of Income

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