Which of the following statements is true? a In the market for resources, firms use resources...

Which of the following statements is true? a In the market for resources, firms use resources to produce goods and services and try to earn profits by selling them. b In the market for products, households supply their labor, capital, land and entrepreneurship ability to firms, and earn income from them. c A key assumption in the economic models studied in the course is as follows: Households own all resources in the economy. d All of the above. e Only a) and b)

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Expert Solution

d. All of the Above

It is true to say that firm uses resouces to produce goods and services and try to earn profits by selling them to consumers and consumers in retutn supply labor, capital, land and enterpreneyrship to the firms and earn factor income from them. It is cycle known as circular flow of money which is shown below.

It is also true that households own all the resouces of the economy which are land, labor, capital and enterpreneurship which they provide to the firms.

Rahul Sunny answered 1 year ago

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