In the markets for the factors of production in the circular-flow diagram,
A)households are sellers and firms are buyers.
B)households are buyers and firms are sellers.
C)households and firms are both buyers.
D)households and firms are both sellers.

Question

Quizplus · Accepted Answer

In the markets for factors of production, households are the ones who supply labor, land, and capital to firms, making them the sellers. On the other hand, firms are the buyers of these factors of production. Therefore, choice A is the correct answer.

In the Markets for the Factors of Production in the Circular-Flow