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.