Which of the following statements is true about a simple circular flow model?
A)Producers are neither buyers nor sellers in the product market.
B)Households are neither buyers nor sellers in the input market.
C)Producers are buyers in the factors market.
D)Households are sellers in the product market.

Question

Quizplus · Accepted Answer

In a simple circular flow model, producers are buyers in the factors market. This is the market where they purchase the labor and other resources needed to produce goods and services. Households are sellers in the factors market, providing the labor and other resources to producers. In the product market, producers are sellers of goods and services, while households are buyers. Option A is incorrect because producers are sellers in the product market. Option B is incorrect because households are buyers in the input market, purchasing goods and services to satisfy their needs and wants. Option D is incorrect because households are not sellers in the product market; they are buyers.

Which of the Following Statements Is True About a Simple