Question

Which of the following is true within the circular flow of economic activity? a. Households are sellers of products and buyers of production factors. b. Households are sellers of products and sellers of production factors. c. Business firms are sellers of products and buyers of production factors. d. Business firms are buyers and sellers of production factors.

Answer 1

The answers is: C) Business firms are sellers of products and buyers of production factors.

Step-by-step explanation:

Households are the owners of the factors of production: e.g. labor, capital, land and entrepreneurship.

Businesses buy these factors of production from households, and employs them in production output.

Then businesses sell products and services to households.

And the cycle continues ...