Asked by Shehroze Tariq on Jun 30, 2024
Verified
The circular-flow diagram illustrates how households _____ goods and services and _____ factors of production.
A) buy;sell
B) buy;buy
C) own;buy
D) own;sell
Households
Economic units consisting of all the people who occupy a housing unit, making decisions about resource allocation, consumption, and labor supply.
Goods and Services
Physical items (goods) and intangible benefits (services) that fulfill human wants or needs.
Factors of Production
Resources used in the production of goods and services, traditionally categorized as land, labor, capital, and entrepreneurship.
- Achieve an understanding of the circular economic flow model and its essential elements.
Verified Answer
AR
Abdellah RahmouneJul 01, 2024
Final Answer :
A
Explanation :
In the circular-flow diagram, households are shown as buying goods and services from firms in the product market (clockwise direction) and selling factors of production to firms in the factor market (counterclockwise direction). Therefore, households buy goods and services (A) and sell factors of production (labor, capital, land, and entrepreneurship) to firms (A).
Learning Objectives
- Achieve an understanding of the circular economic flow model and its essential elements.