In a free market economy, firms purchase factors of production such as labor, from households.
a. the goods and services that households produce are purchased by firms.b. firms purchase factors of production from householdsc. Households purchase factors of production from firmsd. firms loan money to households to purchase capital
product market
product market
It's Product Market.
In a free market economy, firms purchase factors of production such as labor, from households.
a. the goods and services that households produce are purchased by firms.b. firms purchase factors of production from householdsc. Households purchase factors of production from firmsd. firms loan money to households to purchase capital
product market
product market
It's Product Market.
from the household, the income flow which is the purchase of goods and services will become firms. then the income flow from the firms which is the wages, interest and rents will go back to the households.
The flows of factors of production that go from households through factor markets to firms and of the goods and services that go from firms through goods markets to households.
The connection between households and firms in the economy stems from the fact that consumers in this case households work for firms to earn wages as the company makes profits due to increased production.
With wages, rent and dividends.
The circular flow model is a summary of the operation of a market economy, that is the flow between production factors (firms) and households. Firms provide an income to households though employment (labour) and in the same manor households spend their income on firms for services and products.
Circular flow
in a market economy, firms make the goods. Households buy the goods