Question

Consider the circular flow model when answering the following questions

a. A firm decides to buy an existing factory in town. This would occur in the _______

b. Profits (income generated from entrepreneurial ability) are earned by _______

c. The price of coffee is determined in the ________

Answer 1

a. Factor market

b. the firm

c. product market

Step-by-step explanation:

a, Factory is one of the factors of production, if it must be traded, it will be done in the market for factors of production known as the factor market.

b. Profit is a reward for one of the factors of production called entrepreneur, the entrepreneur, in the circular flow model is the firm

d. Consumer goods like coffee are available in the product market, therefore the price for coffee is determined in the product market.